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Calculating Annual salary rate (DHW Exercise10.3)

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asked Nov 7 in BUS 3024S - Contingencies by shuri (580 points)

Hi :) At age 55 member's salary rate is 85000. To calculate the salary rate at age 56, don't we multiply by $$\frac{\bar{s}_{56}}{\bar{s}_{55}}$$  The DHW solutions use $$\frac{s_{56}}{\bar{s}_{55}}$$ and I don't understand why. 

Please help. 

1 Answer

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answered Nov 8 by Njabulo.Dube (2,950 points)
selected Nov 9 by shuri
Best answer

Hi Shuri

You are correct that in order to calculate the annual rate of salary at age 56 exact you would use the ratio of the annual rate of salary as you have given. The reason DHW uses the salary scale instead is because the rate of salary function is not given so the salary scale is used as an approximation.