Dogstuff adjusts salaries based on changes in its stock price, which has increased consistently at one fifth its value per year. Yearly raises are the same fraction of the current salary as the yearly fractional change in stock prices. Hector currently earns $31 comma 500 per year at Dogstuff. Find last year's salary, the salary in 2 years, and the salary 2 years ago.

Last year: $26,250

Two years later = $45,360

Two years before = $21,875

Explanation:

Given that:

Constant fractional changes in salary = 1/5 (same as fractional changes in yearly price of stock).

Hector's current salary = $31,500

Therefore, total salary including the fractional increase with respect to the current salary will be in the form:

Current salary * (1 + 1/5)

1 + 1/5 = 6/5

Salary for previous year:

Current salary / (6/5)

If period to calculate is more than a year; then the fraction is raised to the root of the given year.

That is (6/5)^number of years

Previous year salary:

$31500 / (6/5)

= $31500 / 1.2

= $26,250

Salary 2 years from now:

$31500 * (6/5)^2

= $31500 * 1.2^2

= $31500 * 1.44

= $45,360

Two years before:

$31500 / (6/5)^2

= $31500 / 1.44

= $21,875

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