Evaluate the total expected present value of benefits, Financial Management

Assignment Help:

Question:

Susan started her current job at age 30, with the normal retirement age at 60. The remuneration package of her employment includes the following benefits on top of her salary:

(1) $250,000 payable at the end of the year of death if she dies before age 60;

(2) $30,000 payable annually in advance from age 60 until death if she retires at age 60.

(3) The total expected present value plus the accumulated value from benefits (1) and (2) above, payable at the time of early retirement, if she retires between ages 50 and 60.

(4) A one-off payment of $10,000 at age 60 if she takes normal retirement.

Susan is now 50 years old and contemplating early retirement.

(a) Evaluate the total expected present value of benefits (1) and (2)?

(b) How much value has been accumulated from benefits (1) and (2)?

Basis: AM92 ultimate mortality, 6% pa interest

Related Discussions:- Evaluate the total expected present value of benefits

Treasury yield curve, Treasury securities are government bonds issued...

Treasury securities are government bonds issued by the US Treasury Department. These are issued through the Bureau of the Public Debt. They are debt-financing ins

Process of ambiguity - profit maximisation criterion, Process of Ambiguity ...

Process of Ambiguity - profit maximisation criterion One practical difficulty with profit maximisation criterion for financial decision making is that term-profit is a vagu

Rationale of accounting standards, Rationale of Accounting Standards A...

Rationale of Accounting Standards Accounting Standards are created along with a view to harmonise various accounting policies and practices in use inside a country. The goal o

What are the material items are carried out, What are the Material items ar...

What are the Material items are carried out Material items would have an impact on: Audit tests carried out. For illustration compliance based testing (relying on contro

Show external business risk, Q. Show External business risk? External r...

Q. Show External business risk? External risk is the result of operating conditions imposed on the firm by circumstances beyond its control. The external environments in which

Above the line deduction, Above the line deductions are certain kinds of de...

Above the line deductions are certain kinds of deductions that are deducted from your income before the adjusted gross income is computed for tax purposes. Above the line deduct

Define benefits of paying late, What are the benefits of “paying late” (but...

What are the benefits of “paying late” (but not too late) and how do companies attempt to do this? Since money has time value, the later cash is paid, but not as well late, the b

Dual aspect concept - accounting principle, Dual Aspect Concept - Accountin...

Dual Aspect Concept - Accounting Principle This is, no doubt, the basic concept in accounting. Under this concept, each transaction has got a two-fold aspect: (i) yielding

Mathematical property of median, Mathematical Property The sum of the d...

Mathematical Property The sum of the deviations of the items from median, ignoring signs, is the least. For example, the median of 6, 10, 14, 18 and 22 is 14. The deviations fr

zero salvage value, Big Joe's is changing a piece of equipment. The equip...

Big Joe's is changing a piece of equipment. The equipment will cost $5,000 and has a 5 year life. The equipment can be leased for annual payment of $1,295 paid at the starting of

Write Your Message!

Name

Email id

Message

Verfication Code

User Account

All Pages