Future employee salary/rasies

[dmj120]

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]

=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%.

 

[dmj120]

=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!!!