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Help please! Howard began work at HP Morgan at age 30. The defined benefit pension plan provided by HP Morgan provides an annual retirement benefit
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Howard began work at HP Morgan at age 30. The defined benefit pension plan provided by HP Morgan provides an annual retirement benefit of 4% of career average earnings for each year of service. (a) Howard is now age 39 and his average salary during the last 9 years amounts to $56,671. The salary in the coming year is $66,000. Calculate the annual accrued retirement benefits. (b) Calculate the replacement ratio provided by the pension if Howard retires at age 60. For projection of future salary, assume that future salary is expected to increase 3.5% annually, (c) Suppose that at age 39, Howard pays a single premium to pay an annual deferred life annuity with first payment starting age 60, such that the replacement ratio is 80%. Calculate the single premium, assuming that Howard's mortality follows the Illustrative Life Table and that i = 0.06. Howard began work at HP Morgan at age 30. The defined benefit pension plan provided by HP Morgan provides an annual retirement benefit of 4% of career average earnings for each year of service. (a) Howard is now age 39 and his average salary during the last 9 years amounts to $56,671. The salary in the coming year is $66,000. Calculate the annual accrued retirement benefits. (b) Calculate the replacement ratio provided by the pension if Howard retires at age 60. For projection of future salary, assume that future salary is expected to increase 3.5% annually, (c) Suppose that at age 39, Howard pays a single premium to pay an annual deferred life annuity with first payment starting age 60, such that the replacement ratio is 80%. Calculate the single premium, assuming that Howard's mortality follows the Illustrative Life Table and that i = 0.06Step by Step Solution
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