If your starting salary were $50,000 and you received a 4% increase at the end of every year for 15 years, what would be the total amount, in dollars, you would have earned over the first 16 years that you worked?
The problem at hand is geometric series. The money at the end of 16 years is the sum of the geometric series. The first term, a, is $50,000. Ratio, r, is 1.04.
S = a [(1 – r^n)/(1- r)]
= 50,000 [(1 – (1.04)^16)/ (1 – 1.04)]
=$ 1,091,226.55
