Asked by Martevus Blount on Apr 29, 2024
Verified
Betsy Company estimated that at the end of seven years, it will be necessary to have $90, 000 available in a pension fund.The correct interest rate was 9%.Actuarial information for seven periods at 9% follows:
Future amount of 1 1.8280 Future amount of ordinary annuity of 19.2004 Present value of 1 0.5470 Present value of ordinary annuity of 1 5.0330\begin{array}{llr} \text { Future amount of 1 } &1.8280\\ \text { Future amount of ordinary annuity of 1} &9.2004\\ \text { Present value of 1 } &0.5470\\ \text { Present value of ordinary annuity of 1 } &5.0330\\\end{array} Future amount of 1 Future amount of ordinary annuity of 1 Present value of 1 Present value of ordinary annuity of 1 1.82809.20040.54705.0330
Required:
Compute the amount that the company must deposit at the end of each year in order to have the necessary funds available at the end of the seventh year.
Actuarial Information
Data and analysis provided by actuaries, involved in assessing risks and uncertainties, particularly in the insurance and finance industries.
Pension Fund
A pool of funds accumulated from contributions to provide retirement benefits to employees.
Interest Rate
The percentage of a loan amount charged by the lender to the borrower for the use of money, expressed as a yearly rate.
- Apply actuarial information to compute the necessary periodic deposits for a pension fund.
Verified Answer
ZK
Learning Objectives
- Apply actuarial information to compute the necessary periodic deposits for a pension fund.