Sachs Brands\' defined benefit pension plan specifies annual retirement benefits

Question

Sachs Brands' defined benefit pension plan specifies annual retirement benefits equal to: 1.6% x service years x final year's salary, payable at the end of each year. Angela Davenport was hired by Sachs at the beginning of 2004 and is expected to retire at the end of 2038 after 35 years' service. Her retirement is expected to span 18 years. Davenport's salary is $99,000 at the end of 2018 and the company's actuary projects her salary to be $325,000 at retirement. The actuary's discount rate is 9%. (EVof $1, PV of $1, FAofSL PVA of $1., FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required 2. Estimate by the projected benefits approach the amount of Davenport's annual retirement payments earned as of the end of 2018. 3. What is the company's projected benefit obligation at the end of 2018 with respect to Davenport? (Do not round intermediate calculations. Round your final answer to nearest whole dollar.) . If no estimates are changed in the meantime, what will be the company's projected benefit obligation at the end of 2021 (three years later) with respect to Davenport? (D?not round intermediate calculations. Round your final answer to nearest whole dollar.) 2. Annual retirement payments 3. Projected benefit obligation 2018 4. Projected benefit obligation 2021

Explanation / Answer

Please hit LIKE button if this helped. For any further explanation, please put your query in comment, will get back to you. Projected Banefit Obligation 2018 (15 Years of service) 1.6%*15*325000 78000 78000*PV of n=18 span, i=9% 78000*8.7556 682937 682937* PV of n=20 balance year, i=9% 682937*0.1784 121836 Projected Banefit Obligation 2018 (15 Years of service) 121835.9608 Projected Banefit Obligation 2021 (18 Years of service) 1.6%*18*325000 93600 93600*PV of n=18 span, i=9% 93600*8.7556 819524 819524* PV of n=17 balance year, i=9% 819524*0.2311 189392 Projected Banefit Obligation 2018 (15 Years of service) 189392

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