Sue Cameron has a twin brother, Tom, who works for the Government of Alberta. Tom is covered by a defined benefit pension plan. Tom just turned $45$ years old, and expects to retire at age $65.$

At that time, the pension plan will pay Tom annual pension payments equal to $3\%$ of his final year's salary for each year of services rendered. The pension payments will continue until Tom's

death, which actuaries expect to be when he turns $80$ years old. For the current year, Tom will earn $$50,000,$ and this rate is expected to increase by $8\%$ per year. Assume that the Alberta

Government uses a $10\%$ interest rate for its pension obligations.

Requirement

Determine the current service cost for Tom Cameron's pension for the past year $($the year just before he turned $45).$

Start by determining Tom's annual salary at the time of his retirement. $($Use a financial calculator, and round all final answers to the nearest whole dollar.$)$

Tom's annual salary at the time of retirement will be $$215,785.$

Now determine the current service cost for Tom Cameron's pension for the past year $($the year just before he turned $45).($Use a financial calculator, and round all interim calculations and your fina

answer to the nearest whole dollar.$)$

The current service cost for Tom Cameron's pension for the past year $($the year just before he turned $45)$ is $