Mike is considering job offers from two competing firms. Acme Anvils

Question

Data Insights (DI) Butler 2023-24       Click here for Details ]

Mike is considering job offers from two competing firms. Acme Anvils offers an annual salary of $50,000 with a guaranteed increase of 5% every year. Retro Rockets offers an annual salary of $60,000 with a $3,000 increase each year. Find the salary Mike can expect to earn after 20 years with each company.

soumyap09 · Answer

Please explain how Acme Anvil salary is 126,348

YashM_10 · Answer

For finding out Acme Anvil salary it says that there is a fixed increase of 5% every year. It is similar to a compounding of 50,000 at an interest rate of 5%.
Now to find the time period for a period of 20 years in the company the number of raise is going to be for 19 years as for the first year there is no raise.

so final amount = 50000*(1.05)^19 = 126,347.5. I would have used a calculator to get to this value where I would have squared 1.05 four time to get 1.05^16 and then get to 19.

If anyone has a better solution to find value of 1.05^19 without using calculation please help.

tabishkazi · Answer

even i have the same question how to calculate 1.05^19 fast.

Sajjad1994 · Answer

Please keep in mind that this is the DI section, and you can use the calculator here. There is no need to calculate it manually.

Best.

Sajjad1994 · Answer

Official Explanation

If Mike accepts the offer from Acme Anvils, his year 20 salary will reflect 19 increases of 5% and will be $50,000 × 1.0519 = $126,347.51. If he takes the job with Retro Rockets, he will have received 19 raises of $3,000 each, and his salary will be $60,000 + 19 × $3,000 = $117,000.

dazzler97 · Answer

Why 19 ?? why is salary after 1st year not changing.
If the question had been find salary after 1 year, would it still have remained same with no increment ???

Catman · Answer

Suppose Person Joined the company on 1st January 2023. 
On December 31st 2023, he will complete 1 year and will get the annual salary of $60,000
Salary at the end of 1 year or after 1 year is $60,000.
Yes salary after 1st year would be without the increment.

Salary at the end of 2 year on December 31st 2024( or after 2 year of joining) will be $60,000+$3000 Bonus
Increment in the salary will only be after 2 year onwards.

Laracbo · Answer

Hi 
Indeed, there is a calculator available in the DI section. However, it is a very basic one and there is no square function or any exponent function there. So depsite the fact that there is a calculator, which would definiely make the "final" calculation of 50,000 * 2.526 (=1.05^19) a lot easier, I have no idea how to get the value of 2.526 i.e. 1.05^19 in the first place (obviously entering 1.05*1.05*1.05..... 19 times is out of question for me as it would cost me way too much time). Would you know how we can leverage the calculator to get the approximate value of 1.05^19?

Many thanks.

KushagraKirtiman · Answer

Vous Utilisez votre cerveau (1.05)^4 = 1.215 alors mutlipliez 1.215 cinq fois i.e 1.215*5/1.05 = (1.05)^19

Gemmie · Answer

Salary in year 20 with Acme Anvils :  50 * 1.05^{19}

1.05^{19} = (1.05^4)^4 * 1.05^{3}

1.05^4 = 1.2155 
 1.2155^4 = 2.183 
 2.18 * 1.05 * 1.05 * 1.05 = 2.527

50 * 2.527 = 12.6.35

==> 126,348

Salary in year 20 with Retro Rockets:  60k + 3k * 19 = 117k

==> 117,000

DishaAgarwal12 · Answer

Will something which requires a tough calculation be asked in gmat?

Salary in year 20 with Acme Anvils	Salary in year 20 with Retro Rockets
		$97,500
		$117,000
		$121,750
		$126,348
		$132,665
		$151,617

Mike is considering job offers from two competing firms. Acme Anvils

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