Orange Ltd. has 3 employees. According to their employment award, long service leave (LSL) can be taken after 13 years, at which time the employee is entitled to 10 weeks leave. If the employee leaves before the completion of 13 years service, then there will be no entitlement to leave or to a cash payment in lieu of leave. The names of the employees, their current salaries, and their years of service as at 30 June 2016 are as follows:

Name	Current salary	Years of service
Fred	45,000	6
David	50,000	9
John	60,000	13

The provision for long service leaves as at 1 July 2015 is $10,000.

Government bonds exist with periods to maturity, which exactly match the various periods that must still be served by the employees before LSL entitlements vest with them. These bond rates are as follow:

Years to maturity	Bond Rate %
7	5.2
4	5.0
0	4.0

The projected inflation rate for the foreseeable future is 2%.

The projected probabilities that the employees will stay until such time that the LSL vests are as follows:

Name	Probability (%) of staying until vesting of LSL
Fred	40
David	50
John	100

Required:

Prepare a schedule and calculate the LSL obligation for Orange Ltd. as at 30 June 2016. Show all workings.