Given a project salary cost of $400,000 per year and forecasted wage increases of 5 percent per year,calculate the nondiscounted total salary cost over a three-year project lifecycle.
A)$1,200,000
B)$61,000
C)$1,261,000
D)$1,240,000

Question

Quizplus · Accepted Answer

To calculate the total nondiscounted salary cost over a three-year project lifecycle, we need to calculate the salary cost for each year (assuming no employee turnover or promotions) and then sum them up.

Year 1 salary cost = $400,000
Year 2 salary cost = $400,000 * 1.05 = $420,000
Year 3 salary cost = $420,000 * 1.05 = $441,000

Total nondiscounted salary cost = $400,000 + $420,000 + $441,000 = $1,261,000

Therefore, the best choice is C.

Given a Project Salary Cost of $400,000 Per Year and Forecasted