What will be the monthly income after 2 months?

Question

Jim's current income is $12000. If his monthly income increased by 10%. Find the total income after 2 months.

Answer 1

You can do like that:

• After one month: 12000 + 0.1x12000 = 12000 + 1200 = 13200

• After two months: 13200 + 0.1x13200 = 13200 + 1320 = 14520

But the problem is when the number of months get big!

Then you can use $M = C(1 + i)^t$, $M$ is the final capital, $C$ is the inicial capital, $i$ is the rate and $t$ is the time (like how many months.)

Answer 2

$12000 \times (1.10)^2 = 14520$ is his income after 2 months..