Question

10.) Calculate the total prior service cost using the following informatio e volal prior service cost using the following information. Write your answer on the cover she FACTS: The company has a defined benefit plan Hailey's salary at the end of 2017 $ 112,000 Retirement expected after 30 years of service Retirement period is expected to be 40 years Interest Rate 20% Benefits are calculated as a formula as the product of: Service already provided Percentage Final year's salary is projected to be years 10 20% $ 260,000 AFTER THE PLAN IS INITALLY ADOPTED A CHANGE IS MADE TO THE BENEFITS CALCULATION AS FOLLOWS: Percentage of service yrs. & salary Change made at the beginning of 5.0% Changed from 2.0% previously 2017

Answer 1

	Calculation of Total Prior Service Cost
A	Service Already Provided		10
B	Percentage		5%
C	Final year's salary expected to be		$260,000
	Total prior service cost		$130,000
	(AxBxC)