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KAL
Lv 7
KAL asked in Science & MathematicsMathematics · 1 decade ago

Help with a future value calculation?

I am trying to calculate the long-term financial impact of salary increase that is postponed for three years. Here's the problem in a nutshell...

Two years ago, I was turned down for a promotion that carried an automatic salary increase of $3,000 per year. Annual salary adjustments typically amount to a 3% increase each year. Note that I was denied promotion because of a mostly voluntary decision on my part to accept a particular work-related responsibility...I have now backed out of that responsibility and should be eligible for promotion next year.

I know that my original decision will cost me $9,000 (the $3,000 per year I didn't receive for three years), but my question is this... What is the true total financial impact over a 20-year career of the three year delay in receiving that raise? For example, I know that in the first year, I merely lost $3,000...but in the second year, I lost another $3,000 PLUS the 3% raise associated with the $3,000 raise I didn't receive the previous year ($3,090 total) and in the second year I lost another $3,000 plus the 3% raise associate with the $3,090 raise I didn't receive in the second year.

How would I go about calculating the total financial impact of the delayed promotion over the course of a 20-year career with the company???

2 Answers

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  • Anonymous
    1 decade ago
    Favorite Answer

    From finance class, I remember that FV = PV(1+i) for a sum of money invested for 1 year. Your promotion/raise can be treated like an investment in a calculation because the 3% is basically a "return", but in your case, it's fixed.

    FV = 3000 (20+.03) = 60,900

    Not sure if this is the exact formula you should use, but it seems logical, from what I read. Hope that helps.

  • 1 decade ago

    is this a math question?

    o gosh i'm the first one to answer!!! but not like i really did.. umm

    love ya! anyways! Jesus rules! don't trust the monkey they steal wallets

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