Future employee salary/rasies

dmj120

Board Regular
Joined
Jan 5, 2010
Messages
156
I know how do do a simple salary schedule to to calculate year over year salary.

I've tried googling, but came up short. Does anyone know of a formula that I can use to calculate year over year salary expense average?

I'm trying to create a template to use for new-account bids to factor in average salary expenses based upon contract length. If there is a formula for this purpose, it will help with other category and modality projected calculations.


Inputs:
Account Annual Salary: 370,000
Years: 5
Annual increase: 3%
Average: 392,876

rate
3%
y1
370,000
y2
381,100
y3
392,533
y4
404,309
y5
416,438
average
392,876

<tbody>
</tbody>
 

joeu2004

Well-known Member
Joined
Mar 2, 2014
Messages
2,582
Office Version
2010
Platform
Windows
=FV(3%, 5, -370000) / 5

To understand why, consider your manual calculation:

(370000 + 370000*(1+3%) + 370000*(1+3%)^2 + 370000*(1+3%)^3 + 370000*(1+3%)^4) / 5

The numerator is the same (albeit in reverse) as the sum (future value) of a fixed payment (370,000) at the end of each of 5 years that earns 3%.
 
Last edited:

dmj120

Board Regular
Joined
Jan 5, 2010
Messages
156
=FV(3%, 5, -370000) / 5

To understand why, consider your manual calculation:

(370000 + 370000*(1+3%) + 370000*(1+3%)^2 + 370000*(1+3%)^3 + 370000*(1+3%)^4) / 5

The numerator is the same (albeit in reverse) as the sum (future value) of a fixed payment (370,000) at the end of each of 5 years that earns 3%.

Future Value - awesome!!

Thanks for the explanation as well --- MANY thanks for the formula!!! (y)
 

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