In: Economics
If engineering graduates’ average (starting) salaries were approximately $60,000 for the class of 2010. What will the average starting salaries amount be in 2020, if engineering starting salaries increase at the rate of (a) 2% per year, and (b) twice that rate or 4% per year?
Please no excel need to show work
(a)
Starting average salary of engineering graduates in 2010 = $60,000
Annual rate of increase in salary = 2% or 0.02
Time period = 10 years
Calculate the starting average salary of engineering graduates in 2020 -
Starting average salary = Starting average salary of engineering graduates in 2010 * [1 + Annual rate of increase in salary]time period
Starting average salary = $60,000 * [1 + 0.02]10 = $60,000 * [1.02]10 = $60,000 * 1.21899 = $73,139.4
Thus,
The average starting salary of engineering graduates in 2020 would be $73,139.4
(b)
Starting average salary of engineering graduates in 2010 = $60,000
Annual rate of increase in salary = 4% or 0.04
Time period = 10 years
Calculate the starting average salary of engineering graduates in 2020 -
Starting average salary = Starting average salary of engineering graduates in 2010 * [1 + Annual rate of increase in salary]time period
Starting average salary = $60,000 * [1 + 0.04]10 = $60,000 * [1.04]10 = $60,000 * 1.48024 = $88,814.4
Thus,
The average starting salary of engineering graduates in 2020 would be $88,814.4