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Sachs Brands's defined benefit pension plan specifies annual retirement benefits equal to 1 . 4 % service years final year's salary, payable at the end
Sachs Brands's defined benefit pension plan specifies annual retirement benefits equal to service years
final year's salary, payable at the end of each year. Angela Davenport was hired by Sachs at the beginning of
and is expected to retire at the end of after years' service. Her retirement is expected to span
years. Davenport's salary is $ at the end of and the company's actuary projects her salary to be
$ at retirement. The actuary's discount rate is
At the beginning of changing economic conditions caused the actuary to reassess the applicable discount
rate. It was decided that is the appropriate rate.
Note: Use tables, Excel, or a financial calculator. FV of $ PV of $ FVA of $ PVA of $ FVAD of $ and PVAD
of $
Required:
Calculate the effect of the change in the assumed discount rate on the PBO at the beginning of with
respect to Davenport.
Note: Do not round intermediate calculations. Round your final answer to the nearest whole dollar.
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