James has earned $60,000 annually for the past three years working at abc inc. under abc's defined benefit plan (which uses a 7-year graded vesting schedule) employees earn a benefit equal to 4 percent for every year of service, of the average salary for their three highest full years of compensation with abc. james has worked for five full years for abc and his vesting percentage (based on the 7-year graded vesting schedule) is 60 percent. what is james's vested benefit (or annual retirement benefit he has earned so far)?

$7,200

Explanation:

In calculating James's vested benefit let us pick certain things from the question.

1. The benefit is 4% of the average of the 3 highest salaries.

2. The 4% is then applied go each year they have worked at abc.

James had worked for 3 years and was paid $60,000 each of those years.

The average therefore is,

= (60,000 + 60,000 + 60,000) / 3

= $60,000

$60,000 is the average.

Applying 4% to this would be,

= 4% * 60,000

= $2,400.

The 4% that we just calculated is accrued for every year employees have worked with abc. James has worked 3 years so,

= 3 * 2,400

= $7,200

James's vested benefit is therefore $7,200.

cognitive overload: having a lot on your mind impairs decision-making and tends to result in the simplest, but not necessarily best, option being selected.

empathy gaps: overlooking how you might feel in a different situation can result in unnecessary purchases, such as overbuying when shopping for food on an empty stomach.

optimism and overconfidence: wearing rose-tinted glasses and having unrealistic expectations about the future can affect money management and leave you unprepared for a change in circumstance.

instant gratification: seeking instant gratification drives impulsive spending and can undermine long-term planning and savings.

harmful habits: automatic or mindless behaviour can amplify a poor financial decision as it becomes a recurring event.

social norms: we are heavily influenced by the actions of others; while this can be in certain circumstances, it also contributes to the pressure to keep up with the joneses through conspicuous consumption.