Financial
Cost-of-living adjustment (COLA): percentage raises, dollar caps, and reverse base
Calculate adjusted salaries with Base * (1 + Pct), enforce maximum raise caps with MIN, and recover pre-raise pay accurately.
Standard percentage increase vs capped dollar COLA
Multiplying CurrentSalary by (1 + ColaPct) adds the percentage increase in one step ($64,000 * 1.045 = $66,880). When HR policy caps the annual dollar increase (e.g., max $3,500), MIN(ROUND(Salary * Pct, 2), Cap) clamps high-earner raises cleanly.
To back-calculate prior salary from adjusted pay, divide by (1 + Pct) ($66,880 / 1.045 = $64,000)—never multiply by (1 - Pct), which subtracts 4.5% of the larger post-raise figure ($63,870.40).
The raise percentage and cap are hypothetical policy inputs, not a prescribed COLA rule. Reverse division applies to the uncapped percentage increase only; once a cap binds, use the actual capped adjustment. Validate nonnegative salary, percentage and cap for this example.
| CurrentSalary (A) | ColaPct (B) | MaxCap (C) | Uncapped New | Capped New |
|---|---|---|---|---|
| 64000 | 0.045 | 3500 | 66880 | 66880 |
| 95000 | 0.045 | 3500 | 99275 | 98500 |
Uncapped and capped COLA formulas
At $95,000, a 4.5% increase equals $4,275, so MIN($4,275, $3,500) caps the raise at $3,500 for an adjusted salary of $98,500.
=ROUND(A2 * (1 + B2), 2)Capped raise and reverse base-pay check
Dividing 66880 by (1 + B2) recovers the exact $64,000 starting salary.
=A3 + MIN(ROUND(A3 * B3, 2), C3)Try the example
Use the original values or change them to test your understanding.