What amount must be on deposit at the end of 15 years

Assignment Help Accounting Basics
Reference no: EM131105606

(Pension Funding) You have been hired as a benefit consultant by Maugarite Alomar, the owner of Attic Angels. She wants to establish a retirement plan for herself and her three employees. Maugarite has provided the following information: The retirement plan is to be based upon annual salary for thelast year before retirement and is to provide 50% of Maugarite's last-year annual salary and 40% of the last-year annual salary for each employee. The plan will make annual payments at the beginning of each year for 20 years from the date of retirement. Maugarite wishes to fund the plan by making 15 annual deposits beginning January 1, 2003. Invested funds will earn 12% compounded annually. Information about plan participants as of January 1, 2003, is as follows.
Maugarite Alomar, owner: Current annual salary of $40,000; estimated retirement date January 1, 2028.
Kenny Rogers, flower arranger: Current annual salary of $30,000; estimated retirement date January1, 2033.
Anita Baker, sales clerk: Current annual salary of $15,000; estimated retirement date January 1, 2023.
Willie Nelson, part-time bookkeeper: Current annual salary of $15,000; estimated retirement date January 1, 2018.In the past, Maugarite has given herself and each employee a year-end salary increase of 4%. Maugarite plans to continue this policy in the future.

(a) Based upon the above information, what will be the annual retirement benefit for each plan participant?(Round to the nearest dollar.) (Hint: Maugarite will receive raises for 24 years.)

(b) What amount must be on deposit at the end of 15 years to ensure that all benefits will be paid?(Round to the nearest dollar.)

(c) What is the amount of each annual deposit Maugarite must make to the retirement plan? 

Reference no: EM131105606

Questions Cloud

What is the amount of the payments that karla : What is the amount of the payments that Karla Zehms must make at the end of each of 8 years to accumulate a fund of $70,000 by the end of the eighth year, if the fund earns 7.25% interest, compounded annually?
What is an opportunity cost : What is an opportunity cost? How is this concept used in TVM analysis, and where is it shown on a time line? Is a single number used in all situations? Explain
What ethical issues should james qualls consider : Why might NET Life's pension cost requirement be $8 million less than First Security's requirement for the same future value?
What are some qualitative factors analysts : What are some qualitative factors analysts should consider when evaluating a company's likely future financial performance?
What amount must be on deposit at the end of 15 years : What amount must be on deposit at the end of 15 years to ensure that all benefits will be paid?(Round to the nearest dollar.)
Which of the two approaches should rijo : This deposit will be returned at the end of the twelfth year, assumingno unusual damage to the building structure or fixtures.
Would you recommend renewing the loan or demand : Similarly, if you were the bank loan officer, would you recommend renewing the loan or demand its repayment? Would your actions be influenced if in early 2009 D'Leon showed you its 2009 projections along with proof that it was going to raise more tha..
Starship has recently estimated its cost of funds : Starship has recently estimated its cost of funds at 10%. Should Starship continue this policy of always taking the cash discount?
Which vendor should the press be purchased : Simpson's cost of funds is 10%, and the machine will be purchased on January 1, from which vendor should the press be purchased?

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd