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

[TABLE="class: grid, width: 500"]
<tbody>[TR]
[TD]rate
[/TD]
[TD]3%
[/TD]
[/TR]
[TR]
[TD]y1
[/TD]
[TD]370,000
[/TD]
[/TR]
[TR]
[TD]y2
[/TD]
[TD]381,100
[/TD]
[/TR]
[TR]
[TD]y3
[/TD]
[TD]392,533
[/TD]
[/TR]
[TR]
[TD]y4
[/TD]
[TD]404,309
[/TD]
[/TR]
[TR]
[TD]y5
[/TD]
[TD]416,438
[/TD]
[/TR]
[TR]
[TD][/TD]
[TD][/TD]
[/TR]
[TR]
[TD]average
[/TD]
[TD]392,876
[/TD]
[/TR]
</tbody>[/TABLE]

 

[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!!!