Ans.: 1. The opening projected benefit obligation is $220 million.
2. The service cost represents the present value of benefits earned during the current year and it equals $13 million.
3. Interest expense 5% equals the product of opening PBO and interest rate and in this case it equals $11million.
The closing PBO calculations as follows: | |
USD in million | |
Opening (PBO) | 220 |
Service cost | 13 |
Interest cost | 11 |
Contributions made | -9 |
Actuarial gains | 0 |
Actuarial losses | 0 |
Closing projected benefit obligation | 235 |
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