At Balpy Corporation, an employee's retirement plan is funded by takin

Question

At Balpy Corporation, an employee's retirement plan is funded by taking a set percentage of the employee's wages and matching it with an equal amount, contributed by the corporation. Employees may choose to stop contributions at any time, or continue contributing until their employment is terminated. There is a $2,000 bonus, called an ORT bonus, for employees who stay at the corporation until retirement.

Which of the following is a conclusion that can be properly drawn from the statements above?

A) Employees of the Balpy Corporation who earn higher salaries will receive larger ORT bonuses for staying until retirement.

Which of the following is a conclusion that can be properly drawn from the statements above?

A) Employees of the Balpy Corporation who earn higher salaries will receive larger ORT bonuses for staying until retirement.

B) Employees of the Balpy Corporation who earn lower salaries will contribute a smaller percentage of their salaries to their retirement funds than will employees of the Balpy Corporation who earn higher salaries.

C) Of the Balpy employees who stay until retirement, those who earn lower salaries will receive an ORT bonus that is a larger percentage of their annual salaries than that received by employees with higher salaries.

D) Balpy employees who earn lower salaries will receive less money from their retirement plans than will Balpy employees who earn higher salaries.

E) The Balpy Corporation will benefit financially from hiring employees at high salaries and terminating their employment before the employees have worked for six months.

PiyushK · Answer

This should be an inference question rather than conclusion... 
no answer choice is leading to any conclusion..

dheeraj24 · Answer

Hi, Could Someone explain Why the answer is C ?
not B or D ??

I choose option B because , an employee who earns lower wages typically contribute a smaller percentage of their salaries to their retirement funds than employees earning higher wages.

How can we conclude in C that employees who stay until retirement, those who earn lower salaries will receive an ORT bonus that is a larger percentage of their annual salaries than that received by employees with higher salaries.

Moderators please help..
Thanks in advance

mayank760 · Answer

Assume that there are two employees. One earning $500 and the other $1000. The fixed percentage of contribution is say 12.5% from the organization and the employee.

B is ruled out as the percentage of income contribution is fixed and only the amount is lower.

D is ruled out as someone who is earning a higher wage might chose to abstain from contributing towards this retirement fund, which will entitle the person with the lower salary to receieve a greater retirement benefit.

Hope that helps.

dheeraj24 · Answer

Hi Mayank,

This is my understanding from your explanation.

As far as choice B is concerned , your are assuming that both lower wage and higher wage employees contribute a Similar percentage % (not same amount ) of their income. Hence option B ruled out.

In choice D, You are assuming what if the higher wage employees restrain from contributing , in that case lower wage employee earns more than higher wage employee from retirement plan. Hence option D ruled out.

My interpretation for choice is, so called 2000$ amount (called an ORT bonus) is larger percentage of the annual salaries of lower wage employees than for higher wage employees.

As per your example, Lower wage employee : 500$/annum
 Higher wage employee : 1000$/annum.
Therefore 2000$ bonus is a larger percentage of annual salaries of lower wage employees than that of Higher wage employees.

semwal · Answer

KEY POINTS of the stimulus----
1. employee set % taken as contribution( as per his willingness) and equal amount added by corporation to it.........
2. if he continues full tenure $ 2000 given additionally....by corporation as ORT.

A) Employees of the Balpy Corporation who earn higher salaries will receive larger ORT bonuses for staying until retirement. ORT IS FIXED 
B) Employees of the Balpy Corporation who earn lower salaries will contribute a smaller percentage of their salaries to their retirement funds than will employees of the Balpy Corporation who earn higher salaries. WE DONT KNOW HOW MANY MONTHS/ YERS ONE WILL CONTRIBUTE AND HOW MUCH THE CONTRIBUTION % IS FOR EACH PAY BAND OF EMPLOYEE 
C) Of the Balpy employees who stay until retirement, those who earn lower salaries will receive an ORT bonus that is a larger percentage of their annual salaries than that received by employees with higher salaries.  OF COURSE THAT IS CORRECT...... O
D) Balpy employees who earn lower salaries will receive less money from their retirement plans than will Balpy employees who earn higher salaries. DEPENDS OF LOT OF FACTORS----HOW MUCH DURATION CONTRIBUTION DONE, HOW MUCH IS THE FIXED CONTRIBUTION % ETC 
E) The Balpy Corporation will benefit financially from hiring employees at high salaries and terminating their employment before the employees have worked for six months. NO THOUGHT OF PROFIT TO FIRM IN THE STIMULUS

mayank760 · Answer

Now adding to the stories of the individuals earning $500 and $1000 we can see that $62.5 and $125 are deducted per month from their respective salaries towards contribution in this retirement plan. Let us say both of them are to retire in another 30 years and their salaries do not increase during this period. Now, they would have accumalated $1875 and $3750 in all. $2000 is indeed a larger percentage of $1875 than $3750.

Hope that helps.

paranoidvik · Answer

I was trapped between B and C..but on closer look found that B actually goes against the information provided and says the % of funds is less for lower salaried when compared to higher salaried. The stimulus states, it is a set percentage..meaning all bands may be paying say 5 % of their salaries towards retirement funds, even if the employer adds an equal value, the % of funds contributed will not vary from lower salary to higher salary

C fits smugly

Consider lower salary: $20,000
Higher salary: $40,000
ORT is $2000
% of ORT for lower salaried = 2000 / 20000 = 0.1 = 10 %
% of ORT for higher salaried = 2000 / 40000 = 0.05 = 5 %

C fits smugly

Consider lower salary: $20,000
Higher salary: $40,000
ORT is $2000
% of ORT for lower salaried = 2000 / 20000 = 0.1 = 10 %
% of ORT for higher salaried = 2000 / 40000 = 0.05 = 5 %

mvictor · Answer

uh...took me just little over 3 minutes to crack this baby.

we can infer that those who have lower wages will receive 2k and those who have higher wages will receive 2k.
thus, those who have lower wages, 2k will be better motivation than for those who have higher wages.

Which of the following is a conclusion that can be properly drawn from the statements above?

A) Employees of the Balpy Corporation who earn higher salaries will receive larger ORT bonuses for staying until retirement.
ORT bonus is the same for all, 2k$. out

B) Employees of the Balpy Corporation who earn lower salaries will contribute a smaller percentage of their salaries to their retirement funds than will employees of the Balpy Corporation who earn higher salaries.
not true. the percentage is the same for all employees.

C) Of the Balpy employees who stay until retirement, those who earn lower salaries will receive an ORT bonus that is a larger percentage of their annual salaries than that received by employees with higher salaries.
actually, yes, 2k/smaller amount > 2k/bigger amount. good candidate for correct answer choice.

D) Balpy employees who earn lower salaries will receive less money from their retirement plans than will Balpy employees who earn higher salaries.
this one is tricky, and almost got me pick it as the answer choice. the factor that made me reconsider it is " Employees may choose to stop contributions at any time". this statement makes this answer choice suspicious.

E) The Balpy Corporation will benefit financially from hiring employees at high salaries and terminating their employment before the employees have worked for six months.
how? by paying high salaries? illogical.

shekyonline · Answer

At Balpy Corporation, an employee's retirement plan is funded by taking a set percentage of the employee's wages and matching it with an equal amount, contributed by the corporation. Employees may choose to stop contributions at any time, or continue contributing until their employment is terminated. There is a $2,000 bonus, called an ORT bonus, for employees who stay at the corporation until retirement.
 
Main point is - ORT bonus is fixed at $2000.
so clearly C.

Which of the following is a conclusion that can be properly drawn from the statements above?

A) Employees of the Balpy Corporation who earn higher salaries will receive larger ORT bonuses for staying until retirement.
B) Employees of the Balpy Corporation who earn lower salaries will contribute a smaller percentage of their salaries to their retirement funds than will employees of the Balpy Corporation who earn higher salaries.
C) Of the Balpy employees who stay until retirement, those who earn lower salaries will receive an ORT bonus that is a larger percentage of their annual salaries than that received by employees with higher salaries.
correct.
D) Balpy employees who earn lower salaries will receive less money from their retirement plans than will Balpy employees who earn higher salaries.
E) The Balpy Corporation will benefit financially from hiring employees at high salaries and terminating their employment before the employees have worked for six months.

kntombat · Answer

AndrewN , would love to hear your take on this question.

AndrewN · Answer

Hello,  kntombat . I have a lot on my plate today, so I will keep my analysis brief. I did choose (C), and I did so in about a minute and a half, perhaps because I just wrote a post in the Quant forum, and numbers were on my mind. Anyway, my take on the answer choices:

The passage clearly states that the ORT bonus is $2,000, not that that bonus is awarded on a sliding scale based on salary. This is an easy one to eliminate.

Since we are talking about percentages, we need to stick to percentages, not total amounts. The opening line of the passage tells us that  an employee's retirement plan is funded by taking  a set percentage  of the employee's wages . In other words, that percentage does  not  change from employee to employee. Game over for this one.

Now we are comparing the relative impact or significance of this $2,000 bonus. To someone who earned an annual salary of, say, $100,000, a $2,000 bonus represents just 2 percent of that salary; to someone who earned an annual salary of $30,000, a $2,000 bonus represents one-fifteenth, or 6 2/3 percent of that salary. 6 > 2, so we cannot argue against this one. Even if we used numbers such as $100,000 and $99,999, the balance would tilt in favor of the lower salary, by percentage.

This is a close second, in my book. But you have to be careful not to project real-life considerations onto a passage, and here, we are lacking any information on salaries, actual numbers for us to use to qualify anything. We also have no information on how long employees must work to draw a retirement. Maybe an executive can work for 5 years to qualify for retirement benefits, while a pen-pusher like me (or at least the office worker I used to be) has to stay for 30. We simply have no way of telling what sort of gross sum might be lying in store for those who retire. Finally, it is worth noting that the passage also says nothing about employees working beyond qualifying for retirement, so even if, in my hypothetical scenario, one worker had to work 5 years while another had to work 30, without further information, we could not say whether the latter worker might contribute for an extra 5-10 years. Ultimately, this answer choice fails under scrutiny.

This is loosely connected to the passage at best. Perhaps keeping on an employee will lead to greater revenue for Balpy Corporation, so hiring and firing would be ill advised. Then, where does this arbitrary  six months  come from? Based on the passage, why would we conclude anything about half a year when there are no time markers to lean on?

There you have it. The post ended up being a little longer than I had anticipated, but it was fun. Thank you for bringing the question to my attention, and, as always, good luck with your studies.

- Andrew

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At Balpy Corporation, an employee's retirement plan is funded by takin

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