Henry Has a Defined Benefit Plan That Promises an Annual

question 109

Multiple Choice

Henry has a defined benefit plan that promises an annual retirement benefit based on 2.5% of his final 5-year average annual salary for each year of service.At retirement Henry has 21 years of service and an average salary over the last 5 years of $95,000.What will his annual benefit be?

• A) $95,000
• B) $60,500
• C) $49,875
• D) $28,500
• E) cannot determine

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Definitions:

Short Run

A period during which at least one of a firm's inputs is fixed, limiting its capacity to adjust fully to changes in market demand.

Short Run

A time period in economics during which at least one factor of production is considered fixed, limiting the ability of the economy or firm to adjust to changes.

Fixed Inputs

Inputs in the production process that cannot be easily increased or decreased in the short run, such as land or machinery.

Variable Inputs

Resources used in production that can vary in quantity in the short run, such as labor and raw materials.