The State of Confusion wants to change the current retirement policy for state employees. To do so, however, the state must pay the current pension fund members the present value of their promised future payments. There are 230,000 current employees in the state pension fund. The average employee is 16 years away from retirement, and the average promised future retirement benefit is $380,000 per employee. If the state has a discount rate of 4% on all its funds, how much money will the state have to pay to the employees before it can start a new pension plan?
The State of Confusion wants to change the current retirement policy for state employees. To do so, however, the state must pay the current pension fund members the present value of their promised future payments. There are 230,000 current employees in the state pension fund. The average employee is 16 years away from retirement, and the average promised future retirement benefit is $380,000 per employee. If the state has a discount rate of 4% on all its funds, how much money will the state have to pay to the employees before it can start a new pension plan?
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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The State of Confusion wants to change the current retirement policy for state employees. To do so, however, the state must pay the current pension fund members the present value of their promised future payments. There are 230,000 current employees in the state pension fund. The average employee is 16 years away from retirement, and the average promised future retirement benefit is $380,000 per employee. If the state has a discount rate of 4% on all its funds, how much money will the state have to pay to the employees before it can start a new pension plan?
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