Question

Brenda plans to become a high school teacher and work from the time she is 25 until she is 65. her school district offers a defined benefit pension plan which pays 1.65 percent of final earnings multiplied by years worked. brenda knows that teachers with over 35 years of experience make about $70,000 per year in her district. how much can brenda plan to receive as an annual pension in today’s dollars?

a. $39,480
b. $46,200
c. $34,650
d. $52,360

Answer 1

Brenda's annual pension will be $46,200, calculated by using the pension plan formula of final earnings multiplied by 1.65 percent per year of service, over 40 years of work.

Step-by-step explanation:

To calculate Brenda's annual pension, you'll need to use the formula provided by her school district's defined benefit pension plan. This plan pays 1.65 percent of final earnings multiplied by years worked. Brenda plans to work from the age of 25 until 65, which is 40 years. Assuming she will make $70,000 per year at the end of her career, the calculation is as follows:

Annual Pension = Final Average Salary × (Pension Benefit Percentage / 100) × Years of Service

Annual Pension = $70,000 × (1.65 / 100) × 40

Annual Pension = $70,000 × 0.0165 × 40

Annual Pension = $46,200

Therefore, Brenda can plan to receive an annual pension of $46,200 in today's dollars. So, option B is the correct answer.