A salesman earns $40,000 in commission in his first year and then has his commission reduced by 20% the second year. What percent increase in commission over the second year will give him $38,400 in the third year?
The commission rate must increase by _% over the second year for the salesman to get $38,400 in the third year.

Question

A salesman earns $40,000 in commission in his first year and then has his commission reduced by 20% the second year. What percent increase in commission over the second year will give him $38,400 in the third year?
The commission rate must increase by _% over the second year for the salesman to get $38,400 in the third year.

anonymous · Answer

Commission in second year:
$$(1-0.2)*40,000=32,000$$
Desired commition in third year(38,400)
$$x*(32,000)=38,400\rightarrow x=1,2$$
So the commission must be increased by 20% over second year.