Question

Three employees of the Horizon Distributing Company will receive annual pension payments from the company when they retire. The employees will receive their annual payments for as long as they live. Life expectancy for each employee is 15 years beyond retirement. Their names, the amount of their annual pension payments, and the date they will receive their first payment are shown below: (EV of S1. PV of S1. FVA of $1. PVA of S1. FVAD of $1 and PVAD of S) (Use appropriate factorfs) from the tables provided.) Employee Tinkers $37,09 Evers Chance Annual Date of Fir Paymentl Payment 42,e00 12/31/22 12/31/21 47,800 12/3123 Required: 1. Compute the present value of the pension obligation to these three employees as of December 31, 2018, Assume a 12% interest rate 2 The company wants to have enough cash invested at December 31, 2021, to provide for all three employees. To accumulate enough cash they wi i make three equat annual contra utions to 3 fund that wil ear 12% interest comp ur ded annual y The first contribution will be made on December 31. 2018 Compute the amount of this required annual contribution. (For all requirements, Do not round intermediate calcul lations. Round your final answers to noarest whole dollar amount.) Tinkers Evers Chance Amount of annual contribution 2

Answer 1

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