Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Build a model to simulate the solvency of the pension fund through 2022. Use the market value of the fund at the end of 2016

image text in transcribed
image text in transcribed
Build a model to simulate the solvency of the pension fund through 2022. Use the market value of the fund at the end of 2016 as the starting point for your simulation. Next, simulate the market value of the fund through the end of 201?. To do so, you will need to account for: a. Deductions from the pension that will be made in 201? to pay out benets to current retirees. To compute 201? deductions, use the amount of 2016 deductions provided in the case and assume it grows by a constant annual growth rate. b. Contributions that will be made to the fund in 201?. In your projections, separate the supplementary contributions made by the County from required contributions by the County and its employees. For example, in 2016, total contributions to the fund were $659.3 million {Exhibit 8]. Of that $659.3 million, $2?0.5 million was a supplementary contribution made by Cook County and the remaining $388.8 million were required contributions by the County and its em ployees. c. Investment returns by the fund. Assu me that annual returns are normally distributed. First build your simulator by assuming an arbitrary mean and standard deviation, then adjust the inputs afterwards. In addition, assume that investment returns are realized before any contributions and deductions are made in 201

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Accounting

Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer

12th Edition

978-0073526706, 9780073526706

Students also viewed these Finance questions

Question

4 3 8 . .

Answered: 1 week ago

Question

What is a namespace?

Answered: 1 week ago

Question

Describe tables, rows, and columns.

Answered: 1 week ago