An employer wishes to provide employee retirement health care benefits. The firm faces a current marginal tax rate of 24% and expects to face a 24% rate in the future. On average, employees face a current tax rate of 31%, which is expected to fall to 28% in retirement. The firm earns 12% pretax in its pension account and 15% pretax from its own operations. The average time until retirement for employees is 25 years. The firm is considering funding the promised retiree health care costs through either a sweetened pension benefit or on a pay-as- you-go approach. Under the pay-as-you-go approach, the benefit to employees will be provided as part of a fringe benefit package that is tax deductible to the employer, and the employees are not taxed on the receipt of the benefit. "Sweetened Pension" Option Q1a: Under the "sweetened pension" option, what amount must the pension yield in year 25 to cover $1 of employee medical expenses? [ Select] None of the available choices are correct. $1.39 $1 $1.46 $1.23 [ Select ] Q1b: What is the present value of the employer's cost of providing that amount? [ Select] [ Select ] $0.862 None of the available choices are correct. $0.651 $0.460 $0.062 An employer wishes to provide employee retirement health care benefits. The firm faces a current marginal tax rate of 24% and expects to face a 24% rate in the future. On average, employees face a current tax rate of 31%, which is expected to fall to 28% in retirement. The firm earns 12% pretax in its pension account and 15% pretax from its own operations. The average time until retirement for employees is 25 years. The firm is considering funding the promised retiree health care costs through either a sweetened pension benefit or on a pay-as- you-go approach. Under the pay-as-you-go approach, the benefit to employees will be provided as part of a fringe benefit package that is tax deductible to the employer, and the employees are not taxed on the receipt of the benefit. "Sweetened Pension" Option Q1a: Under the "sweetened pension" option, what amount must the pension yield in year 25 to cover $1 of employee medical expenses? [ Select] None of the available choices are correct. $1.39 $1 $1.46 $1.23 [ Select ] Q1b: What is the present value of the employer's cost of providing that amount? [ Select] [ Select ] $0.862 None of the available choices are correct. $0.651 $0.460 $0.062