brenda plans to become a high - school teacher and work from the time she is 25 until she is 60. her school…

brenda plans to become a high - school teacher and work from the time she is 25 until she is 60. 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 25 years of experience make about $66,000 per year in her district. how much can brenda plan to receive as an annual pension in todays dollars?\na. $35,652\nb. $21,588\nc. $38,115\nd. $24,632

brenda plans to become a high - school teacher and work from the time she is 25 until she is 60. 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 25 years of experience make about $66,000 per year in her district. how much can brenda plan to receive as an annual pension in todays dollars?\na. $35,652\nb. $21,588\nc. $38,115\nd. $24,632

Answer

Explanation:

Step1: Calculate years worked

Brenda works from age 25 to age 60. So the number of years worked is $60 - 25=35$ years.

Step2: Calculate the pension amount

The pension plan pays 1.65 percent (or 0.0165 in decimal form) of the earnings multiplied by years worked. Teachers with over 25 - year experience make $66,000$ per year. The annual pension amount $A$ is calculated as $A = 0.0165\times66000\times35$. First, $0.0165\times66000 = 1089$. Then, $1089\times35=38115$.

Answer:

C. $38,115$