Consider a company that recruited 500 20- year-olds on employment date. The base salary for each of them is 100,000, which grows annually by 2.1% .Each employee, as usual, must contribute to their retirement plan, which will be when they reach 65 years of age, from then on. the pension operator promises to pay them 50 thousand a month. How much should the monthly contributions of each of the 500 employees be in order to be entitled to the pension? How much does all of these contributions represent for the company? Assume an effective annual interest rate of 5% and that you are going to live to age 85.
Consider a company that recruited 500 20- year-olds on employment date. The base salary for each of them is 100,000, which grows annually by 2.1% .Each employee, as usual, must contribute to their retirement plan, which will be when they reach 65 years of age, from then on. the pension operator promises to pay them 50 thousand a month. How much should the monthly contributions of each of the 500 employees be in order to be entitled to the pension? How much does all of these contributions represent for the company? Assume an effective annual interest rate of 5% and that you are going to live to age 85.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Consider a company that recruited 500 20-
year-olds on employment date. The base
salary for each of them is 100,000, which
grows annually by 2.1% .Each employee, as
usual, must contribute to their retirement
plan, which will be when they reach 65 years
of age, from then on. the pension operator
promises to pay them 50 thousand a month.
How much should the monthly contributions
of each of the 500 employees be in order to
be entitled to the pension? How much does
all of these contributions represent for the
company? Assume an effective annual
interest rate of 5% and that you are going to
live to age 85.
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