*PLEASE ANSWER ALL PARTS AND INCLUDE EXCEL FORMULAS AND SCREENSHOT OF EXCEL SPREADSHEET*

REQUIRED

1. You were hired at the beginning of 2018 at a salary of $100,000. If you choose the states defined benefit plan and projections hold true, what will be your annual retirement pay? What is the present value of your retirement annuity as of the anticipated retirement date (end of 2057)? Note, you will work for 40 years (i.e. years of service will be 40 and you will use an n of 40 when determining the future salary), then have a retirement period of 20 years. (Show your work)

2. Suppose instead that you choose the defined contribution plan. Assuming that the rate of increase in salary is the same as the state assumes and that the rate of return on your retirement plan assets will be 6% compounded annually, what will be the future value of your plan assets as of the anticipated retirement date (end of 2057)? What will be your annual retirement pay (assuming continuing investment of remaining assets at 6%)? Note: For this section, you must fill out the Requirement 2 worksheet in the Excel Workbook. I have begun the worksheet for you and additional instructions are provided under Hint section at the top of page 1028 in the text. Also, refer back to installment notes, on how to calculate an amount of a payment (retirement period is unchanged from requirement 1).

Additional Note: The final row in Excel for Requirement 2 will show a different final salary than Requirement 1. Requirement 2 utilizes what the salary was throughout the final year (It does not include the raise for that year). For Requirement 1, you use the final salary amount which would also include a raise for the final year.

3. Based on your answers to #1 and #2, which would you choose, the defined benefit plan or the defined contribution plan? Please provide 1-2 reasons beyond the amount of cash for your answer as well.

Apply your critical-thinking abllity to the knowledge you've gained. These cases will provide you an opportunity to develop your research, analysis, Judgment, and communication skllls. You also will work with other students, Integrate what you've learned, apply it in real-world situations, and consider Its global and ethical ramfications. This practice will broaden your knowledge and further develop your decision-making abillties. "I only get one shot at this?" you wonder aloud. Mrs. Montgomery, human resources manager at Covington State University, has just explained that newly hired assistant professors must choose between two retirement plan options. "Yes, I'm afraid so," she concedes. "But you do have a week to decide." Mrs. Montgomery's explanation was that your two alternatives are: (1) the state's defined benefit plan and (2) a defined contribution plan under which the university will contribute each year an amount equal to 8% of your salary. The defined benefit plan will provide annual retirement benefits determined by the following formula: years of service x salary at retirement. "It's a good thing I studied pensions in my accounting program," you tell her. "Now let's see. You say the state 1.5% is currently assuming our salaries will rise about 3% a year, and the interest rate they use in their calculations is 6%? And, for someone my age, you say they assume I'll retire after 40 years and draw retirement pay for 20 years. I'll do some research and get back to you." Apply your critical-thinking abllity to the knowledge you've gained. These cases will provide you an opportunity to develop your research, analysis, Judgment, and communication skllls. You also will work with other students, Integrate what you've learned, apply it in real-world situations, and consider Its global and ethical ramfications. This practice will broaden your knowledge and further develop your decision-making abillties. "I only get one shot at this?" you wonder aloud. Mrs. Montgomery, human resources manager at Covington State University, has just explained that newly hired assistant professors must choose between two retirement plan options. "Yes, I'm afraid so," she concedes. "But you do have a week to decide." Mrs. Montgomery's explanation was that your two alternatives are: (1) the state's defined benefit plan and (2) a defined contribution plan under which the university will contribute each year an amount equal to 8% of your salary. The defined benefit plan will provide annual retirement benefits determined by the following formula: years of service x salary at retirement. "It's a good thing I studied pensions in my accounting program," you tell her. "Now let's see. You say the state 1.5% is currently assuming our salaries will rise about 3% a year, and the interest rate they use in their calculations is 6%? And, for someone my age, you say they assume I'll retire after 40 years and draw retirement pay for 20 years. I'll do some research and get back to you." Salary End of Year 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 Years to Retirement Contribution Future Value at Retirement 8,000 $ 39 S 100,000$ 77,628 Apply your critical-thinking abllity to the knowledge you've gained. These cases will provide you an opportunity to develop your research, analysis, Judgment, and communication skllls. You also will work with other students, Integrate what you've learned, apply it in real-world situations, and consider Its global and ethical ramfications. This practice will broaden your knowledge and further develop your decision-making abillties. "I only get one shot at this?" you wonder aloud. Mrs. Montgomery, human resources manager at Covington State University, has just explained that newly hired assistant professors must choose between two retirement plan options. "Yes, I'm afraid so," she concedes. "But you do have a week to decide." Mrs. Montgomery's explanation was that your two alternatives are: (1) the state's defined benefit plan and (2) a defined contribution plan under which the university will contribute each year an amount equal to 8% of your salary. The defined benefit plan will provide annual retirement benefits determined by the following formula: years of service x salary at retirement. "It's a good thing I studied pensions in my accounting program," you tell her. "Now let's see. You say the state 1.5% is currently assuming our salaries will rise about 3% a year, and the interest rate they use in their calculations is 6%? And, for someone my age, you say they assume I'll retire after 40 years and draw retirement pay for 20 years. I'll do some research and get back to you." Apply your critical-thinking abllity to the knowledge you've gained. These cases will provide you an opportunity to develop your research, analysis, Judgment, and communication skllls. You also will work with other students, Integrate what you've learned, apply it in real-world situations, and consider Its global and ethical ramfications. This practice will broaden your knowledge and further develop your decision-making abillties. "I only get one shot at this?" you wonder aloud. Mrs. Montgomery, human resources manager at Covington State University, has just explained that newly hired assistant professors must choose between two retirement plan options. "Yes, I'm afraid so," she concedes. "But you do have a week to decide." Mrs. Montgomery's explanation was that your two alternatives are: (1) the state's defined benefit plan and (2) a defined contribution plan under which the university will contribute each year an amount equal to 8% of your salary. The defined benefit plan will provide annual retirement benefits determined by the following formula: years of service x salary at retirement. "It's a good thing I studied pensions in my accounting program," you tell her. "Now let's see. You say the state 1.5% is currently assuming our salaries will rise about 3% a year, and the interest rate they use in their calculations is 6%? And, for someone my age, you say they assume I'll retire after 40 years and draw retirement pay for 20 years. I'll do some research and get back to you." Salary End of Year 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 Years to Retirement Contribution Future Value at Retirement 8,000 $ 39 S 100,000$ 77,628