Sachs Brands' defined benefit pension plan specifies annual retirement benefits equal to: 1.3% × service years...

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Sachs Brands' defined benefit pension plan specifies annualretirement benefits equal to: 1.3% × service years × final year'ssalary, payable at the end of each year. Angela Davenport was hiredby Sachs at the beginning of 2004 and is expected to retire at theend of 2038 after 35 years' service. Her retirement is expected tospan 18 years. Davenport's salary is $96,000 at the end of 2018 andthe company's actuary projects her salary to be $310,000 atretirement. The actuary's discount rate is 6%. (FV of $1, PV of $1,FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Useappropriate factor(s) from the tables provided.)

Required:
1. What is the company's projected benefitobligation at the beginning of 2018 (after 14 years' service) withrespect to Davenport? (Do not round intermediatecalculations. Round your final answer to nearest wholedollar.)
2. Estimate by the projected benefits approach theportion of Davenport's annual retirement payments attributable to2018 service.
3. What is the company's service cost for 2018with respect to Davenport? (Do not round intermediatecalculations. Round your final answer to nearest wholedollar.)
4. What is the company's interest cost for 2018with respect to Davenport? (Do not round intermediatecalculations. Round your final answer to nearest wholedollar.)
5. Combine your answers to requirements 1, 3, and4 to determine the company's projected benefit obligation at theend of 2018 (after 15 years' service) with respect to Davenport.(Do not round intermediate calculations. Round your finalanswer to nearest whole dollar.)

Answer & Explanation Solved by verified expert

4.5 Ratings (815 Votes)

Dear student Use Present value factor from your table other wise it might be possible Minor difference in solution due to rounding of PV factor Answer 1 Annual retirement benefits 1314310000 See Answer

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Sachs Brands' defined benefit pension plan specifies annualretirement benefits equal to: 1.3% × service years × final year'ssalary, payable at the end of each year. Angela Davenport was hiredby Sachs at the beginning of 2004 and is expected to retire at theend of 2038 after 35 years' service. Her retirement is expected tospan 18 years. Davenport's salary is $96,000 at the end of 2018 andthe company's actuary projects her salary to be $310,000 atretirement. The actuary's discount rate is 6%. (FV of $1, PV of $1,FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Useappropriate factor(s) from the tables provided.)Required:1. What is the company's projected benefitobligation at the beginning of 2018 (after 14 years' service) withrespect to Davenport? (Do not round intermediatecalculations. Round your final answer to nearest wholedollar.)2. Estimate by the projected benefits approach theportion of Davenport's annual retirement payments attributable to2018 service.3. What is the company's service cost for 2018with respect to Davenport? (Do not round intermediatecalculations. Round your final answer to nearest wholedollar.)4. What is the company's interest cost for 2018with respect to Davenport? (Do not round intermediatecalculations. Round your final answer to nearest wholedollar.)5. Combine your answers to requirements 1, 3, and4 to determine the company's projected benefit obligation at theend of 2018 (after 15 years' service) with respect to Davenport.(Do not round intermediate calculations. Round your finalanswer to nearest whole dollar.)