3.Using a Spreadsheet to Calculate Pension Benefit Payments: Your employer uses a career average formula to determine retirement payments to its employees.

You have 20 years of service at the company and are considering retirement some time in the next 10 years. Your average salary over the 20 years has been $50,000 and you expect this to increase at a rate of 1 percent per year. Your employer uses a career average formula by which you receive an annual benefit payment of 5 percent of your career average salary times the number of years of service. Calculate the annual benefit if you retire now, in 2 years, 5 years, 8 years, and 10 years. ( LG 18-2)

Average Retire Salary ⴝ⬎ The Payment Will Be Now $50,000 50,000 ⫻ .05 ⫻ 20 ⫽ $50,000 In 2 years 51,005 51,005 ⫻ .05 ⫻ 22 ⫽ $56,105 In 5 years 52,551 52,551 ⫻ .05 ⫻ 25 ⫽ $65,688 In 8 years 54,143 54,143 ⫻ .05 ⫻ 28 ⫽ $78,800 In 10 years 55,231 55,231 ⫻ .05 ⫻ 30 ⫽ $82,847