(Modified from P17-2) Buckeyes defined benefit pension plan specifies annual retirement benefits equal to: 2.0% service years final years salary, payable at the end of each year. James was hired by Buckeyes at the beginning of 2004 and is expected to retire at the end of 2033 after 30 years service. His retirement is expected to span 20 years. James salary is projected to be $250,000 at retirement. The actuarys discount rate is 6%.

Present value of $1: n = 10, i = 6% is 0.55839. Present value of $1: n = 15, i = 6% is 0.41727 Present value of $1: n = 20, i = 6% is 0.31180 Present value of $1: n = 30, i = 6% is 0.17411

Present value of an ordinary annuity: n = 10, i = 6% is 7.36009 Present value of an ordinary annuity: n = 15, i = 6% is 9.71225 Present value of an ordinary annuity: n = 20, i = 6% is 11.46992 Present value of an ordinary annuity: n = 30, i = 6% is 13.76483

Required:

1. Estimate by the projected benefit approach the portion of James annual retirement payment earned as of the end of 2018. (3 points)
2. What is the companys PBO at the end of 2018 with respect to James. (5 points)
3. If no estimates are changed in the meantime, what will be the companys PBO at the end of 2023? (6 points)