Question
Big Three Industries has a defined benefit pension plan that specifies annual retirement benefits equal to: 1.7% x Service years x Final Year's salary Randall
Big Three Industries has a defined benefit pension plan that specifies annual retirement benefits equal to:
1.7% x Service years x Final Year's salary
Randall Pearson was hired by Big Three fifteen years ago. Pearson is expected to retire after 30 years of service. His retirement is expected to span 20 years. At the end of this year, 15 years after being hired, his salary is $55,200. The company's actuary projects Pearson's salary to be $107,600 at retirement. The actuary's discount rate is 8%.
PVA Factors
PVA, n=15,i=8%8.55948
PVA, n=20,i=8%9.81815
PVA, n=25, I-8%10.67478
PV Factors
PV, n=15,i=8%.31524
PV, n=20,i=8%.21455
PV, n=25. I=8%.14602
What is the annual retirement payment that Randall that will be used in Randall's PBO calculations? In other words, what is the annual retirement Randall has earned as of this year?
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