pay wages over the last 23 years

Question

A teacher started work 1986 and for the year I was paid $ 14,275.00
And in 2009 the same teacher was paid $ 79,386.00
2009 – 1986 = 23 years

 

$ 79,386.00 - $ 14,275.00

==========

$ 65,111.00

 

What was the average raise each year in in percent?
1. Over the past four years, the average merit increase has hovered around 4 to 5 percent, so I think it's unrealistic to expect a 10 percent raise. A raise as high as 10 percent is generally reserved for employees whose salary is not competitive with the market.

Answer 1

Assume the average raise is x, compounded over 23 years:

 

(1+x) ^23 * 14275 = 79386

 

(1+x) ^23 = 79386 / 14275 = 5.5612

take ln on both sides,

 

23 * ln(1+x) = ln 5.5612 = 1.72

 

ln(1+x) = 1.72/23 = 0.0746

 

1+x = e ^(0.07) = 1.07745

 

x = 7.745%