Time Value of Money, Corporate Finance

Assume that the average age of the worker is 25 years old. Typically, retirement is at 65. The firm provides a $2000 monthly payment for 25 years for retirees (i.e., 300 monthly payments). The first monthly payment is at age 65. Assume that the firm has already set aside $1,800 per worker to fund its pension liability. Determine the monthly contribution the firm must make to fully fund its liability. Assume the firm makes its first contribution to the pension fund at the end of each month until worker is 65. Assume an annual interest rate of 8%. Must show how to do this problem using your financial calculator. Now do this problem again, and assume that the monthly retirement payments increase by .25% per month.
Posted Date: 2/20/2013 5:59:33 PM | Location : United States







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