When your firm hires a new employee this year, it is obligated to contribute GBP £5,000 to a defined contribution plan for that employee, one year after the hire date. The contribution must be adjusted annually for inflation. Assume that inflation will be a constant 2.0% a year from this point forward. What is the pension cost to you of hiring a 30 year old who will be with the company for 32 years if the appropriate discount rate is 10%? Round your answer to the nearest pound.
When your firm hires a new employee this year, it is obligated to contribute GBP £5,000 to a defined contribution plan for that employee, one year after the hire date. The contribution must be adjusted annually for inflation. Assume that inflation will be a constant 2.0% a year from this point forward. What is the pension cost to you of hiring a 30 year old who will be with the company for 32 years if the appropriate discount rate is 10%? Round your answer to the nearest pound.
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:When your firm hires a new
employee this year, it is obligated to
contribute GBP £5,000 to a defined
contribution plan for that employee,
one year after the hire date. The
contribution must be adjusted
annually for inflation. Assume that
inflation will be a constant 2.0% a
year from this point forward. What is
the pension cost to you of hiring a
30 year old who will be with the
company for 32 years if the
appropriate discount rate is 10%?
Round your answer to the nearest
pound.
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