Range Co. offers a postretirement benefit plan. Range estimates the following benefit payments for Reg Vick...

Range Co. offers a postretirement benefit plan. Range estimates the following benefit payments for Reg Vick after he retires on January 1, 2024: 2024 and 2025,

$18,200 per year; 2026, $32,100; 2027 through 2029, $25,800 per year. Assume end- of-year payments.

On December 31, 2016, Vick has completed 12 of his 16 years of eligibility. The discount rate is 5.15%. The plan is unfunded (no plan assets). Use the following present value factors for a lump sum payment of $1 at 5.15% for n periods:

0.951	1	0.740	6	0.576	11	0.448	16	0.348	21
0.904	2	0.704	7	0.547	12	0.426	17	0.331	22
0.860	3	0.669	8	0.521	13	0.405	18	0.315	23
0.818	4	0.636	9	0.495	14	0.385	19	0.300	24
0.778	5	0.605	10	0.471	15	0.366	20	0.285	25

Answer the following for Vick’s benefits (WATCH THE DATES!):

Service cost for2017

Expert Solution

Calculation of Service cost for 2017

Period	Year	Cash flows	PVF	Discounted Cashflows
0	2016	$ -	1.000	$ -
1	2017	$ -	0.951	$ -
2	2018	$ -	0.904	$ -
3	2019	$ -	0.860	$ -
4	2020	$ -	0.818	$ -
5	2021	$ -	0.778	$ -
6	2022	$ -	0.740	$ -
7	2023	$ -	0.704	$ -
8	2024	$ 18,200.00	0.669	$ 12,176.00
9	2025	$ 18,200.00	0.636	$ 11,575.00
10	2026	$ 32,100.00	0.605	$ 19,421.00
11	2027	$ 25,800.00	0.576	$ 14,861.00
12	2028	$ 25,800.00	0.547	$ 14,113.00
13	2029	$ 25,800.00	0.521	$ 13,442.00

			Service cost for 2017	$ 85,588.00

ekkarill92 answered 1 year ago

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