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Need help with this question Each year, the Schriber Corporation must determine how much to contribute to the companys pension plan. The company uses a

Need help with this question

Each year, the Schriber Corporation must determine how much to contribute to the companys pension plan. The company uses a ten-year planning horizon to determine the contribution which, if made annually in each of the next ten years, would allow for only a 10% chance of the fund running short of money. The company then makes that contribution in the current year and repeats this process in each subsequent year to determine the specific amount to contribute each year. (Last year, the company contributed $23 million to the plan.) The pension plan covers two types of employees: hourly and salaried. In the current year, there will be 6,000 former hourly employees and 3,000 former salaried employees receiving benefits from the plan. The change in the number of retired hourly employees from one year to the next is expected to vary according to a normal distribution with a mean of 4% and standard deviation of 1%. The change in the number of retired salaried employees from one year to the next is expected to vary between 1% and 4% according to a truncated normal distribution with a mean of 2% and standard deviation of 1%. Currently, hourly retirees receive an average benefit of $15,000 per year, whereas salaried retirees receive an average annual benefit of $40,000. Both of these averages are expected to increase annually with the rate of inflation, which is assumed to vary between 2% and 7% according to a triangular distribution with a most likely value of 3.5%. The current balance in the companys pension fund is $1.5 billion.

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