C3E: QUANTITATIVE PRINCIPLES IN
COMPENSATION MANAGEMENT QUIZ
Which of the following should be used to determine the amount of interest
earned on money over a specified period of time?
(A) Percent difference
(B) Percent adjustment
(C) Compound interest
(D) Compa-ratio - ANSWERS-(C) Compound interest
How much interest will you earn on 2,500 in three years, if the interest rate is
6%, and the interest is compounded annually?
(A) 309
(B) 477.54
(C) 489.05
(D) 977.54 - ANSWERS-(B) 477.54
You start with 1,800 in your savings account. You do not make any deposits or
withdrawals and earn 10% interest, compounded quarterly. How much money
will you have in your account after five years?
(A) 1,149.51
(B) 2,674.71
,(C) 2,898.92
(D) 2,949.51 - ANSWERS-(D) 2,949.51
Formula = FV(.025,20,0,-1800)
You need 15,000 in two years in order to take that long-awaited and much
deserved vacation of your dreams. You can earn 12% interest, compounded
quarterly from your credit union. How much money do you need to set aside
now?
(A) 10,058.25
(B) 11,841.14
(C) 11,957.91
(D) 12,802.36 - ANSWERS-(B) 11,841.14
Formula = PV(.03,8,0,15000)
You have been asked to comment on a proposed provision in the union
contract. over the next 3 years, management proposes increases of 2%, 2.5%,
3% over the 3 year life of the contract. The union negotiator insists that it be
3%, 2.5%, 2.0%. Assuming the hourly rate for a job class is 12.50/hr., what is
the rate in three years?
(A) It will be 13.46 after three years
(B) Management rate is higher
(C) Union rate is higher
(D) Cannot calculate - ANSWERS-(A) It will be 13.46 after three years
, Same result in both calcs.
1.02 * 1.025 * 1.03 = 1.076865
1.03 * 1.025 * 1.02 = 1.076865
1.076865 * 12.50 = $13.46
Makayla's salary has grown at a rate of 7.3% per year for the past six years. If
her increases remain the same, how long will her salary take to double?
(A) 9.86 years
(B) 10.42 years
(C) 13.20 years
(D) 27.10 years - ANSWERS-(A) 9.86 years
Rule of 72. = 72/7.3
= 9.86
You have the following salary grades and midpoints. Your org wants to have a
constant midpoint progression. What would be the midpoint percentage?
Grade 10 = Midpoint 2,000
Grade 11 = Midpoint 2,217
Grade 12 = Midpoint 2,456
Grade 13 = Midpoint 2,698
(A) 8%
COMPENSATION MANAGEMENT QUIZ
Which of the following should be used to determine the amount of interest
earned on money over a specified period of time?
(A) Percent difference
(B) Percent adjustment
(C) Compound interest
(D) Compa-ratio - ANSWERS-(C) Compound interest
How much interest will you earn on 2,500 in three years, if the interest rate is
6%, and the interest is compounded annually?
(A) 309
(B) 477.54
(C) 489.05
(D) 977.54 - ANSWERS-(B) 477.54
You start with 1,800 in your savings account. You do not make any deposits or
withdrawals and earn 10% interest, compounded quarterly. How much money
will you have in your account after five years?
(A) 1,149.51
(B) 2,674.71
,(C) 2,898.92
(D) 2,949.51 - ANSWERS-(D) 2,949.51
Formula = FV(.025,20,0,-1800)
You need 15,000 in two years in order to take that long-awaited and much
deserved vacation of your dreams. You can earn 12% interest, compounded
quarterly from your credit union. How much money do you need to set aside
now?
(A) 10,058.25
(B) 11,841.14
(C) 11,957.91
(D) 12,802.36 - ANSWERS-(B) 11,841.14
Formula = PV(.03,8,0,15000)
You have been asked to comment on a proposed provision in the union
contract. over the next 3 years, management proposes increases of 2%, 2.5%,
3% over the 3 year life of the contract. The union negotiator insists that it be
3%, 2.5%, 2.0%. Assuming the hourly rate for a job class is 12.50/hr., what is
the rate in three years?
(A) It will be 13.46 after three years
(B) Management rate is higher
(C) Union rate is higher
(D) Cannot calculate - ANSWERS-(A) It will be 13.46 after three years
, Same result in both calcs.
1.02 * 1.025 * 1.03 = 1.076865
1.03 * 1.025 * 1.02 = 1.076865
1.076865 * 12.50 = $13.46
Makayla's salary has grown at a rate of 7.3% per year for the past six years. If
her increases remain the same, how long will her salary take to double?
(A) 9.86 years
(B) 10.42 years
(C) 13.20 years
(D) 27.10 years - ANSWERS-(A) 9.86 years
Rule of 72. = 72/7.3
= 9.86
You have the following salary grades and midpoints. Your org wants to have a
constant midpoint progression. What would be the midpoint percentage?
Grade 10 = Midpoint 2,000
Grade 11 = Midpoint 2,217
Grade 12 = Midpoint 2,456
Grade 13 = Midpoint 2,698
(A) 8%
