Sivamani is attending an interview for a job and the company gave two offers to him. Offer A: ₹ 20,000 to start with followed by a guaranteed annual increase of 6% for the first 5 years. Offer B: ₹ 22,000 to start with followed by a guaranteed annual increase of 3% for the first 5 years
Solution
Offer A
Starting salary ₹ 20,000
Annual increase = 6%
i.e. `₹ 20,000 xx 6/100`
= ₹ 1200
At the end of I year salary = 20000 + 1200
= ₹ 21200
II year increase = `21200 xx 6/100` = ₹ 1272
At the end of II year salary = 21200 + 1272 = 22472
III year increase = `22472 xx 6/100` = 1348.32
At the end of III year, salary = 22472 + 1348 = 23820
∴ IV year salary = ₹ 23820
Offer B
Starting salary = ₹ 22,000
Annual increase = 3% = `3/100`
I year increase = `22000 xx 3/100` = ₹ 660
At the end of
I year salary = 22000 + 660
= ₹ 22660
II year increase = `22660 xx 3/100` = ₹ 679.8
At the end of II year, salary = ₹ 23339.80
III year increase = `23339.8 xx 3/100` = ₹ 700
At the end of III year, salary = ₹ 24039.80
∴ IV year salary = ₹ 24040
Salary as per Option A = ₹ 23820
Salary as per Option B = ₹ 24040
∴ Option B is better.
