When an additional 2% is added to the subsequent year, you must multiply the earnings of the previous year with 1.2, because that means 100% plus and additional 2% of the base price. The solution is as follows:
First year: $30,000
Second year: $30,000(1.2) = $36,000
Third year: $36,000(1.2) = $43,200
Fourth year: $43,200(1.2) = $51,840
In his fourth year, he made $51,840. His total earnings is the sum of all the individual earnings per year, which is equal to $161,040.
