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Your company gives workers a starting salary of $60,000 and an annual raise $1,500. On average, workers stay with the company for 20 years.
Your company gives workers a starting salary of $60,000 and an annual raise $1,500. On average, workers stay with the company for 20 years. The relevant discount rate is 3%. A. What is the present value of the cost of a worker? ($1,082,846) B. If the company wants to keep the starting salary $60,000 and the present value of the cost of one worker at $1,000,000, what should be the amount of an annual raise? ($847) C. If the company wants to keep the annual raise $1,500 and the present value of the cost of one worker at $1,000,000, what should be the amount of a starting salary? ($54,431) D. The firm decides to give workers a raise at a constant growth (%) instead of the constant annual dollar amount ($1,500). If the company wants to keep the starting salary $60,000 and the present value of the cost of one worker at $1,000,000, what should be the annual growth rate for the starting salary $60,000? (1.31%) Submit your Excel file. Organize your answers as shown below (only the first five years are shown as a hint). Note that the numerical answers that you are supposed to get if you set up the questions correctly are highlighted yellow. All questions require the NPV function, and questions B-D require Solver.
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