Homework Solutions - Ch 17

Homework Solutions - Ch 17 - Exercise 17-6 ($ in millions)...

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Exercise 17-6 ($ in millions) PBO: Beginning of 2006 $360 Service cost ? Interest cost 36 x (10% x $360) Loss (gain) on PBO 0 Less: Retiree benefits (54) End of 2006 $465 Service cost = $465 - 360 - 36 + 54 = $123 million Exercise 17-7 ($ in millions) Plan assets Beginning of 2006 $700 Actual return 77 x (11% x $700) Cash contributions ? Less: Retiree benefits (66) End of 2006 $750 Cash contributions = $750 - 700 - 77 + 66 = $39 million
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Exercise 17-9 Requirement 1 ($ in millions) Service cost $20 Interest cost 12 Actual return on the plan assets, $9 million adjusted for $1 million gain on the plan assets (8) Pension expense $24 Requirement 2 Pension expense (calculated above) 24 Prepaid (accrued) pension cost (difference) 4 Cash (given) 20
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Exercise 17-11 Requirement 1 1.2% x service years x final year’s salary = 1.2% x 20 x $270,000 = $64,800 Requirement 2 The present value of the retirement annuity at the end of 2031 is $64,800 x 9.10791* = $590,193 * present value of an ordinary annuity of $1: n=15, i=7%
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Homework Solutions - Ch 17 - Exercise 17-6 ($ in millions)...

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