A company has a defined benefit pension plan that provides a pension to employees upon retirement. The company has projected the following data for its pension plan:

• Total number of current employees: 100
• Total number of retired employees: 50
• Average salary of current employees: $50,000 per year
• Average salary of retired employees: $40,000 per year
• Average length of service for current employees: 20 years
• Average length of retirement for retired employees: 15 years
• Discount rate: 5%
• Inflation rate: 2%

Assuming that the company expects the pension plan to continue for the next 30 years and that the benefits will be paid out annually in arrears, what is the present value of the projected pension benefits as of today?

Answer rating: 100% (QA)

The detailed answer for the above question is provided below To calculate the present value of the p... View the full answer