At XYZ Company, a pension plan pays a whole life annuity-due of 60% of 3-year final...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
At XYZ Company, a pension plan pays a whole life annuity-due of 60% of 3-year final average salary for an employee retiring at age 65. If an employee retire early at age x < 65, the 60% factor is reduced by 0.03(65-x), where x < 65 is the age at retirement. An employee born on Jan. 1, 1978 joins XYZ. Company on Jan. 1, 2013 with a salary of 80,000. Salaries increase 4% each year. The employee retires on Jan. 1, 2040. Compute the annual pension benefit. 61.15. 100,000 on that date. An employee aged exactly 62 on January 1, 2010 has an annual salary rate of Salaries are revised annually on December 31 each year. Future salaries are estimated using the salary scale given in the table below, where sy/s, y > x denotes the ratio of salary earned in the year of age from y to y + 1 to the salary earned in the year of age x to x + 1, for a life in employment over the entire period (x, y + 1). X Sx 62 3.589 63 3.643 64 3.698 65 3.751 The multiple decrement table below models exits from employment: (i) d) denotes retirements. (ii) d) denotes deaths in employment. (iii) There are no other modes of exit. 62 63 4 d d(2) 52,860 5,068 213 47,579 4,560 214 64 65 38,488 38,488 42,805 4,102 215 The employee has insurance that pays a death benefit equals to 4 times his salary at death if death occurs while employed and prior to age 65; and pays 0 otherwise. The death benefit is payable at moment of death. Assume deaths occur at mid-year. The annual effective rate of interest is 0.05. Calculate the actuarial present value of the death benefit. At XYZ Company, a pension plan pays a whole life annuity-due of 60% of 3-year final average salary for an employee retiring at age 65. If an employee retire early at age x < 65, the 60% factor is reduced by 0.03(65-x), where x < 65 is the age at retirement. An employee born on Jan. 1, 1978 joins XYZ. Company on Jan. 1, 2013 with a salary of 80,000. Salaries increase 4% each year. The employee retires on Jan. 1, 2040. Compute the annual pension benefit. 61.15. 100,000 on that date. An employee aged exactly 62 on January 1, 2010 has an annual salary rate of Salaries are revised annually on December 31 each year. Future salaries are estimated using the salary scale given in the table below, where sy/s, y > x denotes the ratio of salary earned in the year of age from y to y + 1 to the salary earned in the year of age x to x + 1, for a life in employment over the entire period (x, y + 1). X Sx 62 3.589 63 3.643 64 3.698 65 3.751 The multiple decrement table below models exits from employment: (i) d) denotes retirements. (ii) d) denotes deaths in employment. (iii) There are no other modes of exit. 62 63 4 d d(2) 52,860 5,068 213 47,579 4,560 214 64 65 38,488 38,488 42,805 4,102 215 The employee has insurance that pays a death benefit equals to 4 times his salary at death if death occurs while employed and prior to age 65; and pays 0 otherwise. The death benefit is payable at moment of death. Assume deaths occur at mid-year. The annual effective rate of interest is 0.05. Calculate the actuarial present value of the death benefit.
Expert Answer:
Answer rating: 100% (QA)
Lets break this down stepbystep The employee was born on Jan 1 1978 They joined the company on Jan 1 ... View the full answer
Related Book For
Posted Date:
Students also viewed these accounting questions
-
The following additional information is available for the Dr. Ivan and Irene Incisor family from Chapters 1-5. Ivan's grandfather died and left a portfolio of municipal bonds. In 2012, they pay Ivan...
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
The Crazy Eddie fraud may appear smaller and gentler than the massive billion-dollar frauds exposed in recent times, such as Bernie Madoffs Ponzi scheme, frauds in the subprime mortgage market, the...
-
On May 1, Johnson Corporation purchased inventory for $40,000 on credit. On May 15, Johnson sold inventory with a cost of $10,000 for $25,000 on credit. Prepare journal entries to record these...
-
If a galaxy is traveling away from us at 1.0% of the speed of light, roughly how far away is it?
-
Assume that a Canadian company borrowed US\($325,000\), for five years, when US\($1\) = Cdn\($1.10\). If the exchange rate at the end of the first year is US\($1\) = Cdn\($1.08\), and at the end of...
-
Assume you had to serve a complaint on a defendant in Los Angeles, California. Find a company that would be available for service of process.
-
Big Thumbs Company manufactures portable flash drives for computers. Big Thumbs incurs monthly depreciation costs of $15,000 on its plant equipment. Also, each drive requires materials and...
-
For the following data set, what is the mean? Apparent Limits Frequency 50-59 12 40-49 25 30-39 39 20-29 32 10-19 17 38.97 O 33.887 34.98 48.67 O33.14 Question 5 For the data set in problem #4, what...
-
On December 31, the Income Summary account of Davidson Company has a debit balance of $111,000 after revenue of $117,000 and expenses of $228,000 were closed to the account. Jackson Davidson, Drawing...
-
You are a full time employee of an online company. The company is being audited by the IRS. You are in the payroll department and not an accountant. You are given full authority to handle the audit....
-
Congratulations, you were just recently hired by Bailey's Boating World, Inc. as their new accounting intern this summer! Your first job is to prepare their financial statements for their year ended...
-
Use the following data to prepare a statement of cash flows for the year ended December 3 1 using the indirect method Cash balance at prior year - end Increase in wages payable Depreciation expense...
-
1. Suppose you have a uniform electric field, E= 720V/m, that points to the right, as shown in the figure. What is the potential difference (multimeter reading) for the following? (3 pts. each; 9...
-
Two carts of mass M1 and M2 are being pulled up a hill with an angle relative to the horizontal. The carts are connected by an ideal (massless) string with tension F and the front cart, M, is being...
-
Harmon Recycling Services ( HRS ) , a not - for - profit organization, has two drop - off centers, Westside and Eastside. Data for the expected operation in the next quarter follow. Eastside Westside...
-
You have bought one Microsoft share a year ago at $185. Over the year, Microsoft has paid dividend of $2.24 per share. If the current share price is $255, what is your return over the year? Part B (2...
-
Solve each equation. x 3 - 6x 2 = -8x
-
What is a moving average? What is the significance when a stocks price crosses a moving average of the stocks price?
-
A put and a call have the following terms: The price of the stock is currently $29. You sell the stock short. Illustrate how to use the call or the put to reduce your risk exposure. a) What is the...
-
What are the intrinsic values and time premiums paid for the following options? If the stock sells for $31 at the expiration date of the preceding options, what are the profits or losses for the...
-
The following tables present the number of specimens that tested positive for Type A and Type B influenza in the United States during the first 15 weeks of a recent flu season. a. Find the mean and...
-
The following table presents the circulation (in thousands) for the top 25 U.S. daily newspapers in both print and digital editions. a. Find the mean and median circulation for print editions. b....
-
Following are the amounts spent (in millions of dollars) on media advertising in the United States by a sample of 10 companies. a. Find the mean amount spent on advertising. b. Find the median amount...
Study smarter with the SolutionInn App