Our HR department has determined that as an added incentive, all new employees hired into our...

  

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Our HR department has determined that as an added incentive, all new employees hired into our Smoothie business unit should receive a pension of $100 for each year of employment payable annually beginning on their 30th anniversary of employment for life thereafter. Assuming a new employee begins today and works for 20 years before retiring. What is the present value that our CFO must set aside TODAY to fund these obligations assuming the average employee will collect their pension for 25 years and our WACC is 15% (select the closest $$ amount)? Our HR department has determined that as an added incentive, all new employees hired into our Smoothie business unit should receive a pension of $100 for each year of employment payable annually beginning on their 30th anniversary of employment for life thereafter. Assuming a new employee begins today and works for 20 years before retiring. What is the present value that our CFO must set aside TODAY to fund these obligations assuming the average employee will collect their pension for 25 years and our WACC is 15% (select the closest $$ amount)?

Answer rating: 100% (QA)

To calculate the present value of the pension obligations for an employee who works for 20 years bef... View the full answer