Answer to Question #261763 in Financial Math for Kevin

Question

Which would result in the need for a larger monthly deposit to a retirement account with the same ending balance?

a. half the number of years before the money is withdrawn from the account b. half the interest rate

Jon's average salary over the last 3 years was $78,291. He worked at the company for 4 years so was 60% vested in his retirement plan. If his multiplier is 2.21% and his pension plan was based on the final 3 salary years, what is his annual pension?

a. $2,760.37 b. $4,152.55 c. $20,762.77 d. $62,632.80

Answer 1

Answers

Q1

b. half the interest rate

Q2

Annual pension = Average salary×Multiplier×Years of service×Vested Percentage

= $78291 x 2.21% x 4 x 60%

= $4,152.55 rounded 2 decimals.