All funds invested in the pension plan

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On January 1, 2018, the Stridewell Wholesale Shoe Company hired Sammy Sossa. Sammy is expected to work for 25 years before retirement on December 31, 2042. Annual retirement payments will be paid at the end of each year during his retirement period, expected to be 20 years. The first payment will be on December 31, 2043 . During 2018 Sammy earned an annual retirement benefit estimated to be $2,500 per year. The company plans to contribute cash to a pension fund that will accumulate to an amount sufficient to pay Sammy this benefit. Assuming that Stridewell anticipates earning 6% on all funds invested in the pension plan, how much would the company have to contribute in 2018 to pay for pension benefits earned in 2018?

Reference no: EM132014362

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