7 15 pts Michaels current annual salary is 60000 after worki

7. (15 pts) Michael\'s current annual salary is $60,000 after working seven years for Bank of America, with the rate of inflation over that period being 4%/year compounded annually. How much would his salary be ten years ago? (Round your answer to the nearest dollar.) 8. (15 pts) A survey of 400 members of a local sports club, 200 members indicated they plan to attend the next Summer Olympic Games, 120 indicated that they pla

Solution

7.

inflation causes the salary to decrease ,

the salary 10 years ago could be fould using the annuity formula.

Salary 10 years ago = C*[[(1 + i)^n - 1]/i]

             C = present salary = 60, 000

             i = inflation rate = 3% per year = .03

            n = tie perion = 10 yeary

salary = 60000[[(1+.03)^10 - 1]/.03]

=> salary = $ 687832.75868   

So Micheals salary 10 years ago was = $ 687832.75868 per annum