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Ashley is attempting to estimate the present value at retirement of her CPP income of...

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Finance

Ashley is attempting to estimate the present value at retirement of her CPP income of $8,000 that she will receive in the year that she retires. To discount this, she is using the return on her current investments of 7%. Currently inflation is at 5% She estimates that she will live for 25 years after retirement. The value of her CPP income at retirement in real dollars is:

a. $157,948

b. $118,389

c. $160,957

d. $99,755

Bob has worked for We-Love-You Inc. for 45 years as a plant controller. We-Love-You has a defined benefit pension plan which will pay Bob the maximum possible pension based on the legislated maximum accrual rate and the average of his best five years of service to a maximum of 35 years of service. His best five years average is $129,000 and he earned $135,000 the last year he worked. The maximum annual pension he can receive is:

a.

$76,500

b.

$90,300

c.

$71,100

d.

$94,500

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