John was offered a salary of $25,000 when he graduated from school 15 years ago. He was somewhat depressed to read that the average starting salary for someone with his degree today was $45,000. He then decided to determine the annual, compound rate of increase implied in the increase of the starting salary from $25,000 to $45,000 in 15 years. What is this annually compounded growth rate?
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A. B. C. D. E.A
Essentially, this question is a compound interest problem with the interest rate as the unknown value. On the BAII Plus, press 15 N, 25000 PV, 0 PMT, 45000 +/-
FV, CPT I/Y. On the HP12C, press 15 n, 25000 PV, 0 PMT, 45000 CHS FV, i. John would seem to have no reason to be depressed, since the starting salary today has increased by only 4% per year over the last 15 years, which might be somewhat near the past rate of inflation. Make sure the BAII Plus has the P/Y value set to 1.