Jodi is promoted to salary level 2, receives a 4% cost-of-living increase and a 5% merit bonus. What is Jodi's new salary?
| Level | 1 | 2 | 3 |
|-------|---------|---------|---------|
| Salary| $62,000 | $75,000 | $84,000 |
Answer (2)
Determine Jodi's base salary from the table: $75,000.
Calculate the 4% cost-of-living increase: 75000 × 0.04 = $3 , 000 .
Add the cost-of-living increase to the base salary: 75000 + 3000 = $78 , 000 .
Calculate the 5% merit bonus: 78000 × 0.05 = $3 , 900 , and add it to the salary after the cost-of-living increase: 78000 + 3900 = $81 , 900 .
Explanation
Identify Base Salary First, we identify Jodi's new base salary from the table, which is $75,000 at salary level 2.
Calculate Cost-of-Living Increase Next, we calculate the cost-of-living increase. This is 4% of her base salary. To find this, we multiply her base salary by 0.04: 75000 × 0.04 = 3000
So, the cost-of-living increase is $3,000.
Add Cost-of-Living Increase to Base Salary Now, we add the cost-of-living increase to her base salary to find her new salary after the cost-of-living increase: 75000 + 3000 = 78000
Her salary after the cost-of-living increase is $78,000.
Calculate Merit Bonus Next, we calculate the merit bonus. This is 5% of her salary after the cost-of-living increase. To find this, we multiply her salary after the cost-of-living increase by 0.05: 78000 × 0.05 = 3900
So, the merit bonus is $3,900.
Add Merit Bonus to Salary Finally, we add the merit bonus to her salary after the cost-of-living increase to find her new total salary: 78000 + 3900 = 81900
Therefore, Jodi's new salary is $81,900.
Examples
Understanding salary increases and bonuses is crucial in personal finance. For example, if you invest a portion of each salary increase, you can calculate how much your investment will grow over time. Knowing how different types of increases (like cost-of-living adjustments and merit bonuses) affect your overall income helps you plan your budget and savings more effectively. This also applies to understanding interest earned on savings accounts or returns on investments, where percentage increases play a significant role.
Jodi's new salary after a 4% cost-of-living increase and a 5% merit bonus will be $81,900 . This is calculated by first adding the cost-of-living increase of $3,000 to her base salary of $75,000 , resulting in $78,000 . Then, we add the merit bonus of $3,900 , which gives a final total of $81,900 .
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