An employee contributes 10 percent of his Rs. 75,000 salaries into the company's pension plan. The company matches 40 percent of the first 6 percent…
BBS Management of Financial Institutions · 2080 · Solved Question with Answer
An employee contributes 10 percent of his Rs. 75,000 salaries into the company's pension plan. The company matches 40 percent of the first 6 percent of the employee's contributions. The employee is in the 31 percent tax bracket and the plan expected to yield an 8 percent of the return.
a) What is your terminal investment in the plan and your one year return?
b) Assuming all variables remain constant over the next 20 years, what will your plan value contribution and employee's net of tax contribution be in 20 years (when you expect to retire)?