Solution-What is the amount of the annual pension payment

What is the amount of the annual pension payment

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Reference no: EM13553473

Computing Defined Benefit Pension Payments

Francisco Company has established a defined benefit pension plan for its lone employee, Derrald Ryan. Annual payments under the pension plan are equal to 3% of Derrald's highest lifetime salary multiplied by the number of years with the company. Derrald's salary in 2007 was $75,000. Derrald is expected to retire in 20 years, and his salary increases are expected to average 4% per year during that period. As of the beginning of 2008, Derrald had worked for Francisco Company for 12 years.

1. What is the amount of the annual pension payment that should be used in computing Francisco's accumulated benefit obligation (ABO) as of January 1, 2008?

2. What is the amount of the annual pension payment that should be used in computing Francisco's projected benefit obligation (PBO) as of January 1, 2008?

Reference no: EM13553473

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What is the amount of the annual pension payment

Reference no: EM13553473

Reference no: EM13553473

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