Emily got a new job that guarantees her a 6% raise every year. If she started out making $25,000, how long will it be before she doubles her current salary?
Let's first take a look at what happens in the first years.
Emily starts out with a salary of $25,000
After one year her salary has increased with 6%.
This means her salary is 106% of what it was last year.
Therefore her salary is now
(106100)×$25,000=1.06×$25,000=$26,500
One year later her salary again increases with 6%
The means her salary is again 106% of what it was last year
Therefore her salary is now
(106100)×$26,500=1.06×$26,500=$28,090
Now suppose we had the same situation and we wanted to know what her salary was after 2 years.
Instead of first calculating her salary after one year we could also have immediately calculated
(salary after two years)=1.06×(salary after one year)=1.06×1.06×(starting salary)=(1.06)2×(starting salary)=(1.06)2×$25,000=$28,090
Similarly, we could show that for 3 years we have that
(salary after three years)=1.063(starting salary)=1.063×$25,000
and that for x years we have that
(salary after x years)=1.06x=(starting salary)
Now, if we rewrite the exercise as an equation we need to solve
1.06x×$25,000=2×$25,000
dividing both sides by 25000 gives us
1.06x=2
Now, I'm not sure what your level is so I'll give you two options
option 1 (the easy option (for whole years)):
Start with 1 and keep multiplying by 1.06 until the value is bigger or equal to 2.
The number of times you multiplied is the value of x.
To illustrate, this gives
1∗1.06=1.061∗1.06∗1.06=1.062=1.12361∗1.06∗1.06∗1.06=1.063=1.191016(...)1.0611=1.8982985581.0612=2.012196472
Hence after 12 years, her income has doubled.
Option 2 (the advanced option (for partial years)):
This option makes use of logarithms. If you've never heard of logarithms, this method is not for you.
We indicate the natural logarithm as ln()=elog()
We have that
1.06x=2eln(1.06x)=2ex×ln(1.06)=2x×ln(1.06)=ln(2)x=ln(2)ln(1.06)≈11.8957
Hence the answer is approximately 11.8957 years
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