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The Cerlainty Company ( CC ) operates in a world of certainty. It has just hired Mr . Jones, age 3 2 , who will
The Cerlainty Company CC operates in a world of certainty. It has just hired Mr Jones, age who will retire at age draw retirement benefits for years, and die at age Mr Jones' salary is $ per year, but wages are expected to increase at the annual rate of inflation. CC has a defined benefit plan in which workers receive of the final year's wage for each year employed. The retirement benefit, once started, does not have a costofliving adjustment. CC earns annually on its pension fund assets and uses a rate to discount its expected future benefit payments. Assume that pension contribution and benefit cash flows occur at yearend. Do not round intermediate calculations. Round your answers to the nearest dollar. a How much will Mr Jones receive in annual retirement benefits? b What iscCs required annual contribution to fully fund Mr Jones' retirement benefits? $ c Assume now that CC hires Mr Smith at the same $ salary as Mr Jones. However, Mr Smith is years old. Repeat the analysis in parts a and b under the same assumptions used for Mr Jones. What is CCs required annual contribution to fully fund Mr Smith's retirement benefits? s What do the results imply about the costs of hiring older versus younger workers? From a pension funding standpoint alone, would favor worker as the worker requires higher annual pension fund contributions. d Now assume that hires Ms Brown, age at the same time that it hires Mr Smith. Ms Brown is expected to retire at age and to live to age What is CCs annual pension cost for Ms Brown? $ If Mr Jones and Ms Brown are doing the same work, are they truly doing it for the same pay? The company is actually "paying" Ms Brown than they are paying Mr Jones.
The Cerlainty Company CC operates in a world of certainty. It has just hired Mr Jones, age who will retire at age draw retirement benefits for years, and die at age Mr Jones' salary is $ per year, but wages are expected to increase at the annual rate of inflation. CC has a defined benefit plan in which workers receive of the final year's wage for each year employed. The retirement benefit, once started, does not have a costofliving adjustment. CC earns annually on its pension fund assets and uses a rate to discount its expected future benefit payments. Assume that pension contribution and benefit cash flows occur at yearend. Do not round intermediate calculations. Round your answers to the nearest dollar.
a How much will Mr Jones receive in annual retirement benefits?
b What
iscCs required annual contribution to fully fund Mr Jones' retirement benefits?
$
c Assume now that CC hires Mr Smith at the same $ salary as Mr Jones. However, Mr Smith is years old. Repeat the analysis in parts a and b under the same assumptions used for Mr Jones. What is CCs required annual contribution to fully fund Mr Smith's retirement benefits? s
What do the results imply about the costs of hiring older versus younger workers?
From a pension funding standpoint alone, would favor worker as the worker requires higher annual pension fund contributions.
d Now assume that hires Ms Brown, age at the same time that it hires Mr Smith. Ms Brown is expected to retire at age and to live to age What is CCs annual pension cost for Ms Brown? $
If Mr Jones and Ms Brown are doing the same work, are they truly doing it for the same pay?
The company is actually "paying" Ms Brown than they are paying Mr Jones.
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