The Apex Company Has Just Hired Mr

question 6

Multiple Choice

The Apex Company has just hired Mr. Smith, who is age 25 and is expected to retire at age 60. Mr. Smith's current salary is $30,000 per year, but his wages are expected to increase by 5 percent annually over the next 35 years. Apex has a defined benefit pension plan in which workers receive
2 percent of their final year's wages for each year of employment. Assume a world of certainty. Further, assume that all payments occur at year-end. What is Mr. Smith's expected annual retirement benefit, rounded to the nearest thousands of dollars?

• A) $ 35,000
• B) $ 57,000
• C) $ 89,000
• D) $116,000
• E) $132,000

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