If I am paid $300,000 per year, and I get a 10% raise each year, how much will I have earned un 29 years, and what will my last years annual salary be?

Question

I have just a simple question which I essentially asked above. I would love to have an Excell Spreadsheet that I could use to inout my friends salaries as well to calculate their estimates similarly also!

Answer 1

Here's how I would set this up (please see imgur link below):

https://imgur.com/a/FTd6ppW

In cell B5 we enter in the current year's salary and in B6 the percentage rate at which your salary increases each year. Below that we make a table of sorts displaying each year you wish to see projected. In the top "Projected Salary" cell, we enter in this formula: "=B5+(B5*$C$5)". This formula takes your base salary and multiplies it by your percentage increase. The little dollar signs are what are called "absolute cell references" which means that this formula will always refer back to the specific cell C5 (the cell with your percentage amount).

Once we have this as a base, we can copy the formula in cell C7 to the cell below it (C8) and make a few adjustments. We change the formula slightly as follows: "=C7+(C7*$C$5)". This formula now references the first year's increase as a base instead of your starting salary and finishes the equation to produce Year 2's projected salary. From here we select cell C8, then click and drag the little black box in the corner down to match the amount of years we've entered in for projection, to finish our little table.

As for last year's salary, in cell C3 we enter in this formula: "=B5/(1+C5)". This references your current salary and divides it by the percentage rate plus one. Here's some basic algebra explaining why:

What we know:

x + 0.1x = 300000 (Former salary + pay raise = 300000)

 

combine like terms:

1.1x = 300000

Divide by 1.1:

x = 272727.27

Ergo, last year's salary was $272,727.27

Does this answer your question?