Answer to Question #239892 in Finance for Jason

Question

It is January 1st, 2020, you just turned 25-years-old.You are a high-school (only) graduate working only 40 hours per week --playing video games for the remainder of the week--and earning $15 per hour. It is a relatively safe and secure job (immune to viruses) and you plan to work at this job for the next 40 yearsof your life, after which you will retire at age 65; obviously to play video games for the rest of your life.Also, assume that your salary (i.e. minimum wage) increases by 3% wage inflation,fixed until your retirement. For this question, ignore income taxes, CPP, EI, and vacation entitlements. (Yes, totally unrealistic, but we must start somewhere.)

Answer 1

Weekly earn=weekly hours×hourly pay

$40×15=\$600$

(1 + Inflation Rate) * Wages = real income

$40-25=15years$

Total wage$=15×600=\$9000$

Real income

$(1+0.03)×9000=\$9270$