Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Suppose you are the human resource manager for a cellular phone company with 700 employees. Top management has asked you to implement three additional fringe benefits that
were negotiated with employee representatives and agreed upon by a majority of the employees. These include group term life insurance, a group legal services plan, and a wellness
center.
The life insurance is estimated to cost $520 per employee per quarter. The legal plan will cost $312 semiannually per employee. The company will contribute 40% to the life insurance
premium and 75% to the cost of the legal services plan. The employees will pay the balance through payroll deductions from their biweekly paychecks. In addition, they will be charged
1
% of their gross earnings per paycheck for maintaining the wellness center. The company will pay the initial cost of $600,000 to build the center. This expense will be spread over 5
4
years.
(a) What total amount should be deducted per paycheck for these new fringe benefits for an employee earning $83,200 per year?
$3640
(b) What is the total annual cost of the new fringe benefits to the company?
$
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Transcribed Image Text:Suppose you are the human resource manager for a cellular phone company with 700 employees. Top management has asked you to implement three additional fringe benefits that were negotiated with employee representatives and agreed upon by a majority of the employees. These include group term life insurance, a group legal services plan, and a wellness center. The life insurance is estimated to cost $520 per employee per quarter. The legal plan will cost $312 semiannually per employee. The company will contribute 40% to the life insurance premium and 75% to the cost of the legal services plan. The employees will pay the balance through payroll deductions from their biweekly paychecks. In addition, they will be charged 1 % of their gross earnings per paycheck for maintaining the wellness center. The company will pay the initial cost of $600,000 to build the center. This expense will be spread over 5 4 years. (a) What total amount should be deducted per paycheck for these new fringe benefits for an employee earning $83,200 per year? $3640 (b) What is the total annual cost of the new fringe benefits to the company? $
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