# Future employee salary/rasies

#### dmj120

##### Board Regular
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

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#### joeu2004

##### Well-known Member
=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

#### dmj120

##### Board Regular
=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!!! 