PLEASE READ: You may need to zoom into the pictures to see them more clearly. Th

Question

PLEASE READ: You may need to zoom into the pictures to see them more clearly. They are not blurry. ALSO, the written stuff in RED is my work, everything else typed in black is the actual question, so there is enough information. I just need help with getting the steps to get to the answer, and if I am wrong, please help me get to the right answer. The last question, I am unsure how to do, so please help me! Thank you!!

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Font (tedy u XX a. » E.E.2. TAaBbcco AaBBCCD AaBbci AaBbcet AaB AaBbce sotto atta! Iu - x,x' A. 7-A. E = E - .B. 1 Normal 1 No Spac. Heading1 Heading2 Title Subtitle sue fm. Imphan Paragraph Styles E6 - 14. (Computation of Pension Liability) Nerwin, Inc. is a furniture manufacturing company with 50 employees. Recently, after a long negotiation with the local labor union, the company decided to initiate a pension plan as a part of its compensation plan. The plan will start on January 1, 2017. Each employee covered by the plan is entitled to a pension payment each year after retirement. As required by accounting standards, the controller of the company needs to report the pension obligation (liability). On the basis of a discussion with the supervisor of the Personnel Department and an actuary from an insurance company, the controller develops the following information related to the pension plan. Average length of time to retirement 15 years Expected life duration after retirement 10 years Total pension payment expected each year after retirement for all employees. Payment made at the end of the year. $700,000 per year 8%. The interest rate to be used is Instructions: On the basis of the information above, determine the present value of the pension obligation (liability). PVss (15,8%) = 1.48 million

Explanation / Answer

Nerwin Co. Formula: PV - OA = R (PVF - OA n,i) PV - OA = 700000 (PVF - OA25 -15 ,8%) PV - OA = 700000 (10.67478 - 8.55948 ) PV - OA = 700000 (2.1153 ) PV - OA = $ 1,480,710 OR Present Value of the expected annual pension at the end of the 10th year PV - OA = R (PVF - OA n,i) PV - OA = 700000 (PVF - OA 10 ,8%) PV - OA = 700000 (6.71008) PV - OA = $ 4,697,056 Present Value of the expected annual pension at the beginning of current year PV = FV (PVF n,i) PV = 4,697,056 (PVF 15,8) PV = 4,697,056 (0.315242) PV = 1480710 The company's pension obligation liability is $ 1480710 Andrew Bogut a)FVF (n,8%) = $ 1,999,000 / $ 1,000,000 = 1.999 Reading down 8% column 1.999 corresponds to 9 periods b) By setting aside $ 300000 now Andrew can gradually build the fund to an amount to establish the foundation. FV = $ 300000 ( FV 9,8%)       = $ 300000 x 1.999       = $ 599700.Thus the amount needed from Annuity           $ 1,999,000 - $ 599,700 = $ 1,399,300 Payments = FV / (FV - OA 9 , 8%) = 1399300/12.4876 = 112055.2 Stacy Mcgill Lease = 30,000/year Grapes after 5 years sold 60,000/year 11-30 years revenue 110,000 31-40 years 80,000 Total cost of lease = 40(30,000)=$1200000 Total cost of fertile=5(9000)+12000(35)=465000) Total cost for 40 years = 1,665,000 Total revenues = 60000(5)+110,000(20)+80,000(10) = 3,030,000 Net income = $1,365,000 Future value 6%, 40 periods, present value of 1,365,000 .0972 (1365000) = $132,678

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