An $25-$year$-$old employee has been working for his employer for two years. His salary in the first year and second year was $50,000$ and $60,000,$ respectively. When he is $65,$ a defined benefit plan will pay him a lump sum of cash equal to $1\%$ of his annual salary for each year of his service.

Which statement is CORRECT regarding this pension plan?

Question $4$Answer

a$.$

The service cost for the second year is $500.$

b$.$

The service cost for the second year is $600.$

c$.$

The service cost for the second year is present value of $600.$

d$.$

The service cost for the second year is $1,100.$

e$.$

The service cost for the second year is present value of $1,100.$