This is Chp 4 - Annuity.
I have problem with QUESTIONS 5, 6 and 7.
I would be appreciate if any expert could help me and provide the explanation with the answers, thank you.
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After getting his two-year degree in radiation therapy and working for three years at a small hospital. Darmell Johnson went to work for the Mayo Clinic at a salary of $63,500. The clinic puts 6% of his salary into his retirement plan and also allows Darnell to contribute up to an additional 5% of his salary. 1. Johnson decides to put 5% of his salary into his retirement plan in addition to the amount put into the plan by his employer. Find the total annual contribution into the retirement plan.
2. Johnson decides to invest his retirement funds in a mutual fund with global stocks that he hopes will yield 8% per year. Find the future value in his account after 12 years.
2
3. Assume the Mayo Clinic has exactly 55.000 employees and that the average salary per per- son including physicians is $87,300 per year, which includes the cost of health insurance paid by the employer. Estimate the annual payroll.
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4. Use the annual payroll to estimate the annual contribution the Mayo Clinic must make into aFICA (Social Security and Medicare (7.65% of all wages and bthe retirement plans of all employees.
(a) (b)
5.aFind the total labor costs by adding the amounts in Exercises 3 and 4 above and then b write the number using words. It is clear that the Mayo Clinic needs a LOT of revenue to pay employees and this does not even include the costs of buildings,equipment, supplies, etc
(a (b)
6. The Mayo Clinic saved the life of a wealthy entrepreneur who had cancer.He decided to donate $400.000 per year for the next 5 years to the hospital.Find the present value of this gift,assuming 6% per year.
7. Managers have decided to build a new building in 7 years and will need $47,400,000.The chief financial officer (CFO decides to fund this cost by making contributions into a sink- ing fund at the end of each 6-month period.Find the payment needed every 6 months if funds earn 5% per year.
7.
