The ABC Widget company paid its salaried employees each month 1/12 of their annual rate of pay. Then, on a month that began on a Sunday, they switched to paying them every other week 1/26 of their annual pay.

Alice said that works out worse for the employees, as in the first month, they'd get only 1/13 of their annual pay instead of 1/12.

Bob said "No, you're getting some of your money sooner by two weeks, more than making up for it, so that it's better for the employees."

Who is right?

(In reply to This is of interest... by Penny)

Thanks, Penny.
I think the two keys are:
1. Time value of money, ie interest
2. The number of weeks per year isn't exactly 52. 

52 weeks is 364 days, so they get a full year's pay in 364 days, so they get an extra 1 or 2 days pay each year depending on leap year.

Posted by Larry on 2005-01-03 13:52:57