Estimate the percentage of an employee''s salary

Assignment Help Strategic Management

Reference no: EM1327565

Suppose that in a certain defined benefit pension plan:

A. Employees work 45 years earning wages that increase at a real rate of 2%

B. They retire with a pension equal to 70% of their final salary. This pension increases at the rate of inflation minus 1%

C. The pension is receives for 18 years.

D. The pension fund's income is invested in bonds which earn the inflation rate plus 1.5%

Estimate the percentage of an employee's salary that must be contributed to the pension plan if it is to remain solvent

(Hint. Do all calculations in real rather than nominal dollars).

Reference no: EM1327565

Questions Cloud

Explain why is it wiser for the government to put a sales : Explain why is it wiser for the government to put a sales tax on a good that is demand inelastic than on one that is demand elastic.

Computing pv-fv-pmt : The following conditions involve the application of time value of money concept. Janelle Carter deposited $9,750 in the bank on January 1, 1991, at the interest rate of 11% compounded annually. How much has accumulated in account by January 1, 2008?

Explaining quid pro quo and hostile work environment : Examine Quid Pro Quo and Hostile Work Environment when it pertains to sexual harassment.

Explain how does a business describe increase or decrease : Explain how does a business describe whether to increase or decrease the price of the product it sells in order to increase revenue

Estimate the percentage of an employee''s salary : Estimate the percentage of salary

Explain general environment of business : Explain General Environment of Business and discuss one key trend from each of the categories from the General Environment segments that will likely have a significant impact on the industry in the next five years

Question on time value of money : Why do we say money has time value? Why is it significant for business managers to be familiar with the time value of money concepts? Illustrate out the term Present Value.

Explaining barbara walter as a leader : What type of leader is Barbara Walter's?

Suppose q is the quantity demanded for medical care services : Suppose Q is the quantity demanded for medical care services. The linear industry demand function takes the form.

User Account

All Pages