One choice yearly increases : 3% first year, 1% second year, 2% third year
alternately : 2% first year, 1% second year, 3% third year
Since the numbers are simple and the second year the increase is same, we can tell which one is better directly.
The 1st offer is better. They give a 3% hike which is more than the other offer by 1% at the ned of 1 year. If the salary at the beginning is $10,000, Then you get $ 1,000 extra at the end of 1st year. Then the interest earned on $1,000 in two years is additional and is with you as compared to the second contract offer. You receive 1 % more after third year in the second contract terms. That is equal to $1,000. But in the first offer you have an additional amount that is equal to the interest on this amount of 1% for two years.