Total Income After Ten Years of Graduating College

What is the total income a college graduate will have received after ten years?

a. $720,366.43

b. $634,967.72

c. $624,000.00

d. $809,181.80

Answer:

The total income the college graduate will have received after ten years is $720,366.43.

Reflecting on the concept of future income after graduating college can be a thought-provoking exercise. As a college graduate enters the workforce, expectations of salary and income become a reality that shapes their financial journey.

In this scenario, the college graduate expects to earn a salary of $60,000 during the first year after graduation and receive a 4% raise every year after that. The total income after ten years is calculated to be $720,366.43.

To calculate the total income after ten years, the concept of a geometric sequence is applied. The initial salary of $60,000 increases by 4% each year, represented as a geometric sequence with a common ratio of 1.04. The formula to calculate the sum of a geometric sequence is used:

Total Income = Initial Salary * (1 - (Common Ratio ^ Number of Years)) / (1 - Common Ratio)

By plugging in the values, the total income is determined to be $720,366.43. This calculation provides insight into the financial growth and stability a college graduate can expect over a ten-year period after entering the workforce.