How much of a single one-time raise would you need to request after working in your career for 5 years to cover the rate of inflation you found? The income now is $69,111, projected income is $74,757.99 and the inflation rate is 8.17%



Answer :

Answer:

To calculate the single one-time raise needed to cover the rate of inflation over 5 years, we'll use the given information:

- Current income: $69,111

- Projected income after 5 years: $74,757.99

- Inflation rate: 8.17%

Let's break down the steps:

1. **Calculate the inflation factor over 5 years:**

The formula for calculating the future value with inflation is:

\[ \text{Future Value} = \text{Present Value} \times (1 + \text{Inflation Rate})^{\text{Number of Years}} \]

Substituting the values:

\[ \text{Future Value} = 69111 \times (1 + 0.0817)^5 \]

Calculate \( (1 + 0.0817)^5 \):

\[ (1.0817)^5 \approx 1.4692 \]

So,

\[ \text{Future Value} \approx 69111 \times 1.4692 = 101515.61 \]

This is the projected income after accounting for 8.17% annual inflation over 5 years.

2. **Calculate the difference needed as a one-time raise:**

Now, we find the difference between the projected income and the current income:

\[ \text{Difference} = 101515.61 - 69111 = 32404.61 \]

Therefore, the single one-time raise needed after 5 years to cover the rate of inflation is approximately **$32,404.61**.

This amount represents the increase needed to ensure your income keeps up with the projected inflation rate of 8.17% over the next 5 years.