Question

An employee has an average wage of $60,000 and has worked for the firm for 25 years. The defined benefit pension plan pays retirees 2.5% of the average wage times the years of service. The employee can expect to receive _______ per year upon retirement.

Answer 1

$37,500

Step-by-step explanation:

Data provided in the question:

Average wage of the employee = $60,000

Years of service = 25 years

Now,

Amount paid in the defined benefit pension plan

= 2.5% of the average wage times the years of service

or

The amount employee can expect to receive

= 2.5% × Average wage × years of service

= 0.025 × $60,000 × 25

= $37,500