Jackie is promoted to salary level 3, receives a 4% cost-of-living increase and a 5% merit bonus. What is Jackie's new salary?
| Level | 1 | 2 | 3 |
|-------|---------|---------|---------|
| Salary | $42,000 | $49,000 | $58,000 |
$[?]
Answer (2)
Calculate the cost-of-living increase: 58000 \t × 0.04 = 2320
Calculate the salary after the cost-of-living increase: 58000 + 2320 = 60320
Calculate the merit bonus: 60320 \t × 0.05 = 3016
Calculate the final salary: 60320 + 3016 = \t\boxed{$63336}
Explanation
Initial Salary and Increases Jackie's starting salary at level 3 is $58,000. She receives a 4% cost-of-living increase and a 5% merit bonus. We need to calculate her new salary after these increases.
Cost-of-Living Increase First, we calculate the cost-of-living increase amount: C os tO f L i v in g I n cre a se = S a l a ry × C os tO f L i v in g P erce n t a g e CostOfLivingIncrease = $58,000 \times 0.04 = $2,320
Salary After Cost-of-Living Increase Next, we calculate the salary after the cost-of-living increase: S a l a ry A f t er C os tO f L i v in g = S a l a ry + C os tO f L i v in g I n cre a se SalaryAfterCostOfLiving = $58,000 + $2,320 = $60,320
Merit Bonus Calculation Now, we calculate the merit bonus amount based on the salary after the cost-of-living increase: M er i tB o n u s = S a l a ry A f t er C os tO f L i v in g × M er i tB o n u s P erce n t a g e MeritBonus = $60,320 \times 0.05 = $3,016
Final Salary Calculation Finally, we calculate the final salary by adding the merit bonus to the salary after the cost-of-living increase: F ina lS a l a ry = S a l a ry A f t er C os tO f L i v in g + M er i tB o n u s FinalSalary = $60,320 + $3,016 = $63,336
Conclusion Therefore, Jackie's new salary is $63,336.
Examples
Understanding percentage increases is crucial in personal finance. For example, if you invest money in the stock market and your investment grows by a certain percentage each year, you can calculate your returns using similar methods. Also, when planning for retirement, understanding how inflation (a cost-of-living increase) and investment returns affect your savings helps ensure you have enough money to live comfortably.
Jackie's new salary, after applying a 4% cost-of-living increase and a 5% merit bonus to her starting salary of $58,000, is $63,336. This is calculated by first adding the cost-of-living increase and then applying the merit bonus based on the new salary. The final result reflects both increases efficiently.
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