In many defined-contribution pension plans, the employer provides a fixed-percentage contribution to the employees retirement. Assume that
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In many defined-contribution pension plans, the employer provides a fixed-percentage contribution to the employee’s retirement. Assume that you must contribute $4,000 per annum beginning next year
(time 1), growing annually with the inflation rate of 2% per year.What is the pension cost of hiring a 25-year-old who will stay with the company for 35 years? Assume a discount rate of 8% per year.Note: You need the growing annuity formula from page 53, which you should look up.
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