Question: We learned that merit pay increases may add a cost burden to employers because these increases carry over in base pay. Refer to Table 3-9,

We learned that merit pay increases may add a cost burden to employers because these increases carry over in base pay. Refer to Table 3-9, in which Anne Brown's annual salary is listed at the end of 2015 was $50,000 and John Williams' was $35,000.

3.9 Let's 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 through the year 2020. Using a 5 percent rate for each, what will the annual increases amount to? What will their base pay rates be at the end of 2020?

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