Math problem? Equate allowance convenience to hourly wage.?
For example, consent to's say-so one works for abc corp:
Retires after 35 years
Is compensated $100 per month x 35 years worked for a total of $3500/mo for natural life beside no adjustment for inflation. Let's assume reward for 30 years.
What is the best road to incorporate the benefit of this allowance to an hourly wage base on a 40 hour week, 50 weeks a year?
Let's read aloud our worker made $10/hr within 1972 and finished at $25/hr in 2007. This shouldn't thing, but I'm looking for the extra hourly rate this type of income would cost.
I judge you could find the cost of a comparable annuity in todays dollars that would provide impossible to tell apart life span benefit for a starting point.
Thank you in finance math whizards
Answers:
This is THE fundamental quiz underpinning much of allowance actuarial science. I can receive a ballpark answer for you if I simplify things.
Basically you equate the convenience of some payment/hour accumulate over the 35 years from 1972 to 2007 to the merit the retiree receive starting in 2007.
Let's assume any money you invest returns 7%/ year.
If to be exact so, $1/year for 30 years is worth $13.30 (assuming dawn of year payment)
So the total expediency of the $3,500/month benefit at retirement is $3,500 x 13.3 x 12 = $559,000.
Based on what I originally said,this have to equal the accumulate helpfulness of the payments/hr.
How much do you hold to contribute/year?
The appeal of $1 compensated into a fund respectively year over 35 years which accumulate at 7% amounts to $147.91 at the shutting.
So.
147.91 x annual contribution = $559,000
The annual contribution is $3,779/yr
Converted to an hourly rate at 40hrs/week and 50 weeks a year, this is 3779/(40x50) = $1.89/hr.
CAVEATS: This assumes a bunch of things:
rank annual contributions (you could seize sophisticated beside the stack factor and capture a contribution amount which increases beside inflateion)
No mortality: We assumed everything to do next to this be a resolve. When actuaries do these calculation they echo the probability of different things taking place close to loss until that time retirement, prospect the hand will quit, etc.
Everthing (the benefit and the contributions) are compensated within annual installments; monthly's more accurate.
Could you look at my ebay postings & make clear to me what ya'll deduce??
How do I work out inflation from October 2006 to date? (UK)?
Gold prices?
What is AP(Accounts Payables) Module within oracle-apps-finance..?
Can you appropriate over someone debt.?
Retires after 35 years
Is compensated $100 per month x 35 years worked for a total of $3500/mo for natural life beside no adjustment for inflation. Let's assume reward for 30 years.
What is the best road to incorporate the benefit of this allowance to an hourly wage base on a 40 hour week, 50 weeks a year?
Let's read aloud our worker made $10/hr within 1972 and finished at $25/hr in 2007. This shouldn't thing, but I'm looking for the extra hourly rate this type of income would cost.
I judge you could find the cost of a comparable annuity in todays dollars that would provide impossible to tell apart life span benefit for a starting point.
Thank you in finance math whizards
Answers:
This is THE fundamental quiz underpinning much of allowance actuarial science. I can receive a ballpark answer for you if I simplify things.
Basically you equate the convenience of some payment/hour accumulate over the 35 years from 1972 to 2007 to the merit the retiree receive starting in 2007.
Let's assume any money you invest returns 7%/ year.
If to be exact so, $1/year for 30 years is worth $13.30 (assuming dawn of year payment)
So the total expediency of the $3,500/month benefit at retirement is $3,500 x 13.3 x 12 = $559,000.
Based on what I originally said,this have to equal the accumulate helpfulness of the payments/hr.
How much do you hold to contribute/year?
The appeal of $1 compensated into a fund respectively year over 35 years which accumulate at 7% amounts to $147.91 at the shutting.
So.
147.91 x annual contribution = $559,000
The annual contribution is $3,779/yr
Converted to an hourly rate at 40hrs/week and 50 weeks a year, this is 3779/(40x50) = $1.89/hr.
CAVEATS: This assumes a bunch of things:
rank annual contributions (you could seize sophisticated beside the stack factor and capture a contribution amount which increases beside inflateion)
No mortality: We assumed everything to do next to this be a resolve. When actuaries do these calculation they echo the probability of different things taking place close to loss until that time retirement, prospect the hand will quit, etc.
Everthing (the benefit and the contributions) are compensated within annual installments; monthly's more accurate.