A facility has a curent salary budget of $750,000 with a planned salary increase for the next year of 3.5%. Inflation will impact the expense budget by 5%. WHAT WILL BE THE SALARY BUDGET FOR NEXT YEAR?
To calculate the salary budget for next year, we need to consider the planned salary increase and inflation impact.
Step 1: Calculate the salary increase amount.
The current salary budget is $750,000, and the planned salary increase is 3.5%.
To find the increase amount, multiply the current salary budget by the percentage increase:
Salary increase amount = $750,000 x (3.5% / 100)
Step 2: Calculate the inflation impact on the salary budget.
The inflation impact is given as 5%, so we need to find the amount that 5% of the current salary budget represents:
Inflation impact amount = $750,000 x (5% / 100)
Step 3: Calculate the total salary budget for next year.
To find the total salary budget for next year, we need to add the salary increase amount and the inflation impact amount to the current salary budget:
Total salary budget = Current salary budget + Salary increase amount + Inflation impact amount
Now, let's calculate the salary budget for next year using this formula.
Step 1: Salary increase amount = $750,000 x (3.5% / 100)
= $750,000 x 0.035
= $26,250
Step 2: Inflation impact amount = $750,000 x (5% / 100)
= $750,000 x 0.05
= $37,500
Step 3: Total salary budget = $750,000 + $26,250 + $37,500
= $813,750
Therefore, the salary budget for next year will be $813,750.