Question

An industrial pipeline welder is comparing pension plans for two different job offers.

First offer: $66,421 average annual wage, 1.9% per year of service, with a monthly pension payment of $2,629.17 after 25 years of service
Second offer: $87,000 average annual wage, 1.5% per year of service
The welder plans to work for the same amount of time at each company. What is the difference in monthly pension payments?
O The first offer pays $95.88 more per month.
O The second offer pays $95.88 more per month.
O The first offer pays $89.58 more per month.
O The second offer pays $89.58 more per month.

Answer 1

The first offer pays $816.67 more per month than the second offer.

Step-by-step explanation:

To find the difference in monthly pension payments, we first need to calculate the monthly pension payment for the second offer. The second offer has a 1.5% per year of service pension rate, so after 25 years of service, the pension payment would be:

Pension Payment = ($87,000 * 0.015) * 25 / 12 = $1812.50

The monthly pension payment for the first offer is given as $2629.17. Therefore, the difference in monthly pension payments is:

Difference = $2629.17 - $1812.50 = $816.67