Under the NBA deferred compensation plan, payments made at the end of each year accumulate up to retirement and then retireesare given two options. Option 1 allows the retiree to select the amount of the annual payment to be received, and option 2 allows theretiree to specify over how many years payments are to be received. Assume Hardaway has had $8,000 deposited at the end of eachyear for 30 years, and that the long-term interest rate has been 7%.Required:a. How much has accumulated in Hardaway's deferred compensation account?b. How much will Hardaway be able to withdraw at the beginning of each year if he elects to receive payments for 16 years?c. How many years will Hardaway be able to receive payments if he chooses to receive $85,000 per year at the beginning of eachyear?Note: For all requirements, round your final answers to the nearest whole number. Use tables, Excel, or a financial calculator. (FVof $1. PV of $1. EVA of $1, PVA of $1. EVAD of $1 and PVAD of $1)a. Balance in fundb. Withdrawl amountc. Receive PaymentsYears

Time value of money is a financial concept which is used to analyze various investments and…

Answered: Under the NBA deferred compensation…

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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Antonia works at First National Bank.Her employer offers her a pension retirement plan,which will be 1.75% of her average salary for the last 5 years of employment for every year worked.Antonia is planning on retiring at the end of this year after 26 years of employment.Her salaries for the last 5 years are:$91,300, $92,500, $96,750, $99,400, and $105,000. Calculate Antonia’s pension
Sachs Brands's defined benefit pension plan specifies annual retirement benefits equal to 1.3% x service years * final year's salary, payable at the end of each year. Angela Davenport was hired by Sachs at the beginning of 2010 and is expected to retire at the end of 2044 after 35 years' service. Her retirement is expected to span 18 years. Davenport's salary is $87,000 at the end of 2024 and the company's actuary projects her salary to be $265,000 at retirement. The actuary's discount rate is 9%. At the beginning of 2025, changing economic conditions caused the actuary to reassess the applicable discount rate. It was decided that 10% is the appropriate rate. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Required: Calculate the effect of the change in the assumed discount rate on the PBO at the beginning of 2025 with respect to Davenport. Note: Do not round intermediate calculations. Round your final answer to…
Company has an plan to provide a pension plan for its one employee. They plan to start saving on 12/31/2020 and will save the same amount at the end of each year for 4 years ending at 12/31/2023. Once the money is accumulated on 12/31/2023. They will place in in an investment that will earn 9% annual interest. The company will pay $6,000 at the start of year year starting 1/1/2025 and continuing 4 more years to 1/1/2029 total of 5 payments. Instead of the amount of money sets aside from the savings annuity is $25,000 at 12/31/2023. So if the amount of money the company need to save every year is $5,887 starting 12/31/2020 then what interest does this savings account earn annually. I got 4% is that correct? thank you brenda
Sachs Brands's defined benefit pension plan specifies annual retirement benefits equal to 1.2% x service years x final year's salary, payable at the end of each year. Angela Davenport was hired by Sachs at the beginning of 2010 and is expected to retire at the end of 2044 after 35 years' service. Her retirement is expected to span 18 years. Davenport's salary is $95,000 at the end of 2024 and the company's actuary projects her salary to be $305,000 at retirement. The actuary's discount rate is 9%. Note: Use tables, Excel, or a financial calculator. (EV of $1. PV of $1. FVA of $1. PVA of $1. EVAD of $1 and PVAD of $1) At the beginning of 2025, the pension formula was amended to: 1.40% * Service years * Final year's salary The amendment was made retroactive to apply the increased benefits to prior service years. Required: 1. What is the company's prior service cost at the beginning of 2025 with respect to Davenport after the amendment described above? 2. Since the amendment occurred at…
The XYZ corporation pension plan provides a lifetime annual income to its employees upon retirement at age 65. The plan provides 4% for each year of service of the employee's salary upon retirement. Moreover, those retiring after 65 have their benefit increased by 1.1% for each year beyond 65 that they work. Caitlin retires at age 73 with 16 years of service. If her salary upon retirement is $60, 106, what is her annual pension benefit?
Sachs Brands's defined benefit pension plan specifies annual retirement benefits equal to 1.6% x service years x final year's salary. payable at the end of each year. Angela Davenport was hired by Sachs at the beginning of 2010 and is expected to retire at the end of 2044 after 35 years' service. Her retirement is expected to span 18 years. Davenport's salary is $94,000 at the end of 2024 and the company's actuary projects her salary to be $300,000 at retirement. The actuary's discount rate is 8%. Note: Use tables, Excel, or a financial calculator. (EV of $1. PV of $1. EVA of $1. PVA of $1. EVAD of $1 and PVAD of $1) Required: 1. What is the company's projected benefit obligation at the beginning of 2024 (after 14 years' service) with respect to Davenport? Note: Do not round intermediate calculations. Round your final answer to the nearest whole dollar. 2. Estimate by the projected benefits approach the portion of Davenport's annual retirement payments attributable to 2024 service. 3.…
Sachs Brands's defined benefit pension plan specifies annual retirement benefits equal to 1.3% × service years x final year's salary, payable at the end of each year. Angela Davenport was hired by Sachs at the beginning of 2007 and is expected to retire at the end of 2041 after 35 years' service. Her retirement is expected to span 18 years. Davenport's salary is $91,000 at the end of 2021 and the company's actuary projects her salary to be $285,000 at retirement. The actuary's discount rate is 9%. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 2. Estimate by the projected benefits approach the amount of Davenport's annual retirement payments earned as of the end of 2021. 3. What is the company's projected benefit obligation at the end of 2021 with respect to Davenport? (Do not round intermediate calculations. Round your final answer to the nearest whole dollar.) 4. If no estimates are changed in the…
Sachs Brands's defined benefit pension plan specifies annual retirement benefits equal to 1.6% * service years x final year's salary, payable at the end of each year. Angela Davenport was hired by Sachs at the beginning of 2010 and is expected to retire at the end of 2044 after 35 years' service. Her retirement is expected to span 18 years. Davenport's salary is $89,000 at the end of 2024 and the company's actuary projects her salary to be $275,000 at retirement. The actuary's discount rate is 7%. At the beginning of 2025, changing economic conditions caused the actuary to reassess the applicable discount rate. It was decided that 8% is the appropriate rate. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Required: Calculate the effect of the change in the assumed discount rate on the PBO at the beginning of 2025 with respect to Davenport. Note: Do not round intermediate calculations. Round your final answer to…
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Vizsla Services offers its employee a defined benefit pension plan. This plan pays the employee 2% of the employee's salary for each year of service, with a maximum of 30 years. The employee is projected to have a final salary of $520,000. The employee has worked for Vizsla Services for 8 year and is expected to work for the company for another 17 years. The employee is expected to live for 28 years after retiring. Vizsla Services uses a 4% interest rate for all calculations for its post-retirement benefits and all calculations are ordinary annuities. What is gross PBO for the current year?
Sachs Brands's defined benefit pension plan specifies annual retirement benefits equal to 1.5 % x service years x final year's salary, payable at the end of each year. Angela Davenport was hired by Sachs at the beginning of 2010 and is expected to retire at the end of 2044 after 35 years' service. Her retirement is expected to span 18 years. Davenport's salary is $98,000 at the end of 2024 and the company's actuary projects her salary to be $320,000 at retirement. The actuary's discount rate is 8%. At the beginning of 2025, changing economic conditions caused the actuary to reassess the applicable discount rate. It was decided that 9% is the appropriate rate. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Required: Calculate the effect of the change in the assumed discount rate on the PBO at the beginning of 2025 with respect to Davenport. Note: Do not round intermediate calculations. Round your final answer to…

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