Question

In: Finance

Cleaner's Inc. is switching to paying employees every 2 weeks rather than weekly and will therefore"skip"...

Cleaner's Inc. is switching to paying employees every 2 weeks rather than weekly and will therefore"skip" 1 week's pay. The firm has 25 employees who work a 60-hour week and earn an average wage of $12.50 per hour. Using a 10% rate of interest, how much will this change save the firm annually?

Solutions

Expert Solution

Saving from the change = Present value of 1-week payment - Present value of 2-week payments

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

Cell reference -

Hope this will help, please do comment if you need any further explanation. Your feedback would be appreciated.


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