If the YMPE rises 3.5% each year, what is the increase on the current YMPE of $50,100 in five years?

To determine the increase in the Yearly Maximum Pensionable Earnings (YMPE) over a period of five years at an annual increase rate of 3.5%, we can use the formula for compound interest. The equation is expressed as:

Final Value = Principal x (1 + Rate)^(Number of Years)

In this situation, the principal is the current YMPE of $50,100, the rate is 3.5% or 0.035, and the time period is five years.

Using the formula:

Final Value = $50,100 x (1 + 0.035)^5

Calculating the compound factor:

(1 + 0.035)^5 ≈ 1.1887

Now, we can find the final YMPE after five years:

Final Value ≈ $50,100 x 1.1887 ≈ $59,610.87

To find the increase, we subtract the original YMPE from the final value:

Increase = Final Value - Original YMPE

Increase = $59,610.87 - $50,100 ≈ $9,510.87

However, if we focus on the approximate option, we see that despite the exact calculations rounding off to