Merit pay increases create a cost burden to employers because these increases carry over to base pay each year. At the end of 2015, Anne Brown earned $50,000 per year as a systems analyst and John Williams earned $35,000 per year as an administrative assistant. Each received a 5 percent pay increase every year until the year 2020.

	Anne Brown ($)	John Williams ($)
2016	$52,500	$36,750
2017	$55,125	$38,587
2018	$57,881	$40,516
2019	$60,775	$42,542
2020	$63,814	$44,669

1. Under a merit pay system, calculate Annes salary based on a 7% annual increase for years 2016 through 2020.
2. Lets assume that both employees have reached the maximum pay rates for their jobs in 2015. Under a longevity pay system, calculate the annual longevity payments for each employee for years 2016 through 2020.
3. Under a merit pay system scenario, lets assume the goal is to provide Anne and John with the same annual pay increases as measured in dollars, just for 2016. It has been determined that Annes annual increase rate will be 5%. What should the rate be for John? What will Anne and Johns new salaries be at the end of 2016?