Refer to the following in doing Exercises 68–70. A typical new assistant professor at a liberal arts college starts at age 30 with a salary of $45,000, while colleagues retiring now at age 65 may make about twice that. One college gives annual pay raises of inflation plus 1%, plus a promotion raise (to associate professor) of $1500 after (usually) 6 years and another promotion raise (to full professor) of $1500 after (usually) another 6 years.

Question 21.100

70. (Spreadsheet helpful) Suppose that you are the vice president for academic affairs at the liberal arts college. Suggest a salary policy that would result in the new assistant professor, when she retires in 35 years, making the equivalent of

  1. $90,000 in today’s dollars.
  2. $135,000 in today’s dollars. (The candidate for your faculty position would prefer that—hence she would be more likely to accept an offer to come work at your college.)