Question
Aguilaera Co. maintains a defined benefit plan for its employees where vested employees earn an annual retirement payout of 5.50% of their projected final annual
Aguilaera Co. maintains a defined benefit plan for its employees where vested employees earn an annual retirement payout of 5.50% of their projected final annual salary for each year worked. Benefits vest each year by 10% until the employee is 100% vested. Assume that new employee Smith earns a starting annual salary of $132,000, but is projected to earn $165,000 annually at her projected retirement date of fifteen years from now. After Smith's first year of service, determine the present value of the PBO retirement cash flow stream, measured at Smith's retirement date, assuming a 20-year retirement period and a 6% discount rate.
Note: Round answer to the nearest whole dollar.
Present value of the PBO retirement cash flow stream:
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started