Penny Lane Corp. sponsors a defined benefit pension plan for its CEO, Sumeet. The plans benefit formula is below. This formula determines the annual payment due to Sumeet during retirement (paid at the end of each retirement year, as long as Sumeet is alive).

Benefit formula: 2% years of service highest salary prior to retirement

Additional facts about the plan (as of December 31, 2020):

Sumeets years of service provided so far, as of December 31, 2020: 8 years

Sumeets expected retirement date: December 31, 2030.

Sumeets life expectancy after retirement: 20 years

Sumeets salary for 2020: $600,000

Sumeets expected highest salary prior to retirement: $900,000

Settlement rate: 4%

Expected rate of return on plan assets: 7%

Determine the service cost component of Penny Lanes annual pension expense for 2020 (round your final answer to the nearest $1,000).

A. $103,000 B.$165,000 C.$181,000 D. $1,445,000 E. None of the above Show all steps please - thank you