Answer:
An employee has an average wage of $60,000 and has worked for the firm for 28 years. The defined benefit pension plan pays retirees 2.3% of the average wage times the years of service. The employee can expect to receive __$1,380_____ per year upon retirement.
Explanation:
a) Data and Calculations:
Average wage = $60,000
Number of years worked in the firm = 28 years
Defined benefit pension plan rate = 2.3%
Annual defined benefit pension plan = $1,380 ($60,000 * 2.3%)
Total benefit to be received = $38,640 ($1,380*28) or ($60,000 *28 * 2.3%).
b) This employee is expected to receive the total benefit of $38,640 for serving the firm for 28 long years under the defined pension plan, given the plan rate of 2.3% of the average wage.
Answer:
d. $165,000
Explanation:
Basically there are three types of activities:
1. Operating activities: It includes those transactions which affect the working capital, and it records transactions of cash receipts and cash payments.
2. Investing activities: It records those activities which include purchase and sale of the fixed assets
3. Financing activities: It records those activities which affect the long term liability and shareholder equity balance.
The computation is shown below:
Cash flow from Operating activities
Net income $150,000
Add: Decrease in accounts receivable $15,000 ($65,000 - $80,000)
Net Cash flow from Operating activities $165,000
Answer:
The retirement costs are rising faster than social security benefits .
Explanation:
The various costs related to retirement are:
- The travelling costs can increase as the retired people tend to travel often in their idle time.
- The costs related entertainments increase as they have time to engage in their hobbies
- Socialization costs: Socialization ends with eating out alot and this affects the wallet
- Health insurance premiums
- Medical expenses are increasing at a tremendous rate
- Long term care : Continuing long term care is proving to be quite expensive for retired people
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