Sachs Brands's defined benefit pension plan specifies annual retirement benefits equal to 1.4% xservice years x final year's salary, payable at the end of each year. Angela Davenport was hired bySachs at the beginning of 2007 and is expected to retire at the end of 2041 after 35 years' service.Her retirement is expected to span 18 years. Davenport's salary is $82,000 at the end of 2021 andthe company's actuary projects her salary to be $240,0o00 at retirement. The actuary's discount rateis 8%. (FV of $1, PV of $1, FVA of $1, PVA of S1, 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 retirementpayments earned as of the end of 2021.3. What is the company's accumulated benefit obligation at the end of 2021 with respect toDavenport? (Do not round intermediate calculations. Round your final answer to the nearest wholedollar.)4. If no estimates are changed in the meantime, what will be the accumulated benefit obligation atthe end of 2024 (three years later), when Davenport's salary is S90,000? (Do not round intermediatecalculations. Round your final answer to the nearest whole dollar.)Please answer in this table format2. Annual Retirement Payments3. Accumulated Benefit Obligation 20214. Accumulated Benefit Obligation 2024

ABO stands for Accumulated benefit obligation which is defined as the amount of the pension plan…

Answered: is expec actuary

Business

Accounting

is expec actuary

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Sachs Brands's defined benefit pension plan specifies annual retirement benefits equal to 1.4% 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 2007 and is expected to retire at the end of 2041 after 35 years' service.
Her retirement is expected to span 18 years. Davenport's salary is $82,000 at the end of 2021 and
the company's actuary projects her salary to be $240,0o00 at retirement. The actuary's discount rate
is 8%. (FV of $1, PV of $1, FVA of $1, PVA of S1, 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 2021.
3. What is the company's accumulated benefit obligation at the end of 2021 with respect to
Davenport? (Do not round intermediate calculations. Round your final answer to the nearest whole
dollar.)
4. If no estimates are changed in the meantime, what will be the accumulated benefit obligation at
the end of 2024 (three years later), when Davenport's salary is S90,000? (Do not round intermediate
calculations. Round your final answer to the nearest whole dollar.)
Please answer in this table format
2. Annual Retirement Payments
3. Accumulated Benefit Obligation 2021
4. Accumulated Benefit Obligation 2024

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