A Pension Plan Promises to Pay $70,000 at the End

question 61

Essay

A pension plan promises to pay $70,000 at the end of each year for 10 years of the retirement period.
Required:
Compute the funds required to fund this pension plan at the start of the retirement period assuming:
a. discount rate of 12%; or
b. discount rate of 9%.

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Definitions:

Hugo Münsterberg

A German-American psychologist known for his pioneering work in applied psychology, particularly in the fields of industrial and organizational psychology.

Wilhelm Wundt

A German physiologist and philosopher, widely regarded as the father of experimental psychology.

Industrial Psychology

The scientific study of human behavior in the workplace and applies psychological theories and principles to organizations.

1964 Civil Rights Act

This landmark piece of legislation in the United States outlawed discrimination based on race, color, religion, sex, or national origin, significantly influencing the country's civil rights movement.