Example Defined Benefit Salary Growth 4.00% Earned Benefit Salary Assumption 1234567∞ 2.50% $75,000.00 2.50% $78,000.00 2.50% $81,120.00 2.50% $84,364.80 2.50% $87,739.39 2.50% $91,248.97 2.50% $94,898.93 8 2.50% $98,694.88 9 2.50% $102,642.68 10 2.50% $106,748.39 11 3.00% $111,018.32 12 3.00% $115,459.05 13 3.00% $120,077.42 14 3.00% $124,880.51 15 3.00% $129,875.73 16 3.00% $135,070.76 17 3.00% $140,473.59 18 3.00% $146,092.54 19 3.00% $151,936.24 20 3.00% $158,013.69 Average Last 3-years $152,014.15 Earnerd Benefit Total 55.00% Potential Annual Payments $83,607.79 Retirement Years Discount Rate 25 6.00% Lump Sum $1,068,788.16

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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explain me with the steps, computations and the manual formulas !! how to get the results in the green boxes. ! i want to understand the logicof this insurance defined benefit exercise.
Example
Defined Benefit
Salary Growth
4.00%
Earned Benefit
Salary Assumption
1234567∞
2.50%
$75,000.00
2.50%
$78,000.00
2.50%
$81,120.00
2.50%
$84,364.80
2.50%
$87,739.39
2.50%
$91,248.97
2.50%
$94,898.93
8
2.50%
$98,694.88
9
2.50%
$102,642.68
10
2.50%
$106,748.39
11
3.00%
$111,018.32
12
3.00%
$115,459.05
13
3.00%
$120,077.42
14
3.00%
$124,880.51
15
3.00%
$129,875.73
16
3.00%
$135,070.76
17
3.00%
$140,473.59
18
3.00%
$146,092.54
19
3.00%
$151,936.24
20
3.00%
$158,013.69
Average Last 3-years
$152,014.15
Earnerd Benefit Total
55.00%
Potential Annual Payments
$83,607.79
Retirement Years
Discount Rate
25
6.00%
Lump Sum
$1,068,788.16
Transcribed Image Text:Example Defined Benefit Salary Growth 4.00% Earned Benefit Salary Assumption 1234567∞ 2.50% $75,000.00 2.50% $78,000.00 2.50% $81,120.00 2.50% $84,364.80 2.50% $87,739.39 2.50% $91,248.97 2.50% $94,898.93 8 2.50% $98,694.88 9 2.50% $102,642.68 10 2.50% $106,748.39 11 3.00% $111,018.32 12 3.00% $115,459.05 13 3.00% $120,077.42 14 3.00% $124,880.51 15 3.00% $129,875.73 16 3.00% $135,070.76 17 3.00% $140,473.59 18 3.00% $146,092.54 19 3.00% $151,936.24 20 3.00% $158,013.69 Average Last 3-years $152,014.15 Earnerd Benefit Total 55.00% Potential Annual Payments $83,607.79 Retirement Years Discount Rate 25 6.00% Lump Sum $1,068,788.16
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