In: Accounting
Sachs Brands' defined benefit pension plan specifies annual
retirement benefits equal to: 1.4% × service years × 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 $86,000 at the end of 2018 and
the company’s actuary projects her salary to be $260,000 at
retirement. The actuary's discount rate is 8%. (FV of $1, PV of $1,
FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use
appropriate factor(s) from the tables provided.)
Required:
2. Estimate by the accumulated benefits approach the
amount of Davenport’s annual retirement payments earned as of the
end of 2018.
3. What is the company’s accumulated benefit
obligation at the end of 2018 with respect to Davenport?
(Do not round intermediate calculations. Round your final
answer to nearest whole dollar.)
4. If no estimates are changed in the meantime,
what will be the accumulated benefit obligation at the end of 2021
(three years later) when Davenport’s salary is $95,000? (Do
not round intermediate calculations. Round your final answer to
nearest whole dollar.)
2.Annual retirement payments
3.Accumulated benefit obligation 2018
4.Accumulated benefit obligation 2021