Microsoft Word - Geers Corporation

Gloria is employed by Geers Company. Geers adopts a pension plan on Dec. 31, 2000. At the time of adoption Gloria has been working for Geers for exactly 10 years and is 9 years from retirement (i.e. Gloria will retire on Dec. 31, 2009). Glorias salary when the plan is started is $100,000, and is expected to increase 3% each year until retirement. Her salary on Dec. 31, 2001 is $103,000. In calculating her benefits, Gloria will be given credit for the 10 years that she has already worked for Geers.

Geers pension formula is: (1%)(Final Salary)(Years Worked)

The appropriate discount rate is 10%. Gloria will start receiving retirement checks one year after she retires and is expected to receive checks for 15 years.

Required:

(1) What is Glorias expected salary at retirement?

(2) On

Dec. 31, 2000 determine Geers:

(3) On

Dec. 31, 2001 determine Geers:

1. Projected Benefit Obligation (PBO):
2. Accumulated Benefit Obligation (ABO):
3. Projected Benefit Obligation (PBO):
4. Accumulated Benefit Obligation (ABO):

(4) Compute Geers 2001 service cost.