Academic journal article ABA Banking Journal

Sleight of Mind

Academic journal article ABA Banking Journal

Sleight of Mind

Article excerpt

We received just one correct solution to our "MONEY" teaser (May issue). This honor was achieved by Larry G. Johnson, president, Parkersburg Region, WesBanco Bank, Inc., Parkersburg, W.Va. We are quoting his response:

"Ned should accept salary schedule B. He will make $1,000 more every year. If he works for the bank for 20 years, he will make $20,000 more than he would under schedule A. The decision can be made by examining what is made each six months. The first six months, Ned will make $20,000 under A or B. In the second six months, Ned will continue to get $20,000 under A, but $21,000 under B. At the end of the first year he will have made $40,000 under A or $41,000 under B. But after that year he gets a $4,000 raise from A.

"The first six months of the second year he will earn $22,000 under A. His salary under B will also be $22,000. And while his A salary remains fixed at $22,000 for the second six months of the second year, his B salary becomes $23,000. So, after two years Ned would have made $84,000 under A ($40,000 + $44,000), but $86,000 under B ($20,000 + $21,000 + $22,000 + $23,000). The pattern continues for as long as Ned works for the bank. …

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