PFIN 7:STUDENT EDITION-TEXT
7th Edition
ISBN: 9780357033616
Author: Billingsley
Publisher: CENGAGE L
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Chapter 14, Problem 6FPE
Summary Introduction
To explain: Types of 401 k retirement benefit plan.
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Linda Calloway and Meredith Perdue are neighbors in Charleston. Linda works as a software engineer for Progressive Apps Corporation, while Sherry works as an executive for Industrial Container Company. Both are married, have two children, and are well paid. Linda and Meredith are interested in better understanding their pension and retirement plans.
Progressive Apps Corporation, the company where Linda works, has a contributory plan in which 5 percent of the employees’ annual wages is deducted to meet the cost of the benefits. The firm contributes an amount equal to the employee contribution. The plan uses a five-year graded vesting procedure; it has a normal retirement age of 60 for all employees, and the benefits at retirement are paid according to a defined contribution plan.
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To encourage employees to save, the company contributes an additional 10%to these savings accounts, with the company’s contribution not to exceed $50 per month per employee. The company’s contributions however, do not become available to the employee unless the account is maintained for at least 5 years. If the credit union guarantees an interest rate of 8% compounded monthly, how much will Carol have in her account after 3 years ? After 10 years ?
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salary, his maximum contribution. XYZ company will match 100 percent of this
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ABC Total Contribution
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Chapter 14 Solutions
PFIN 7:STUDENT EDITION-TEXT
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