[owens]

ABC Corporation defined benefit pension plan specifies annual retirement benefits equal to:

1 .6% * service years * final year's salary, payable at the end of each year

Emily Smith was hired by ABC at the beginning of 1989 and is expected to retire at the end of 2023 after 35 years of service. Her retirement is expected to span 18 years. Davenport's salary is $90,000 at the end of 2003 and the company's actuary projects her salary to be $240,000 at retirement. The actuary's discount rate is 7%.

Required:
1. What is the company's projected benefit obligation for the beginning of 2003 with respect to Emily Smith?
2. What is Emily's projected annual retirement benefit attributable to 2003 service?
3. What is the company's service cost for 2003 with respect to Emily?
4. What is the interest cost for 2003 with respect to Emily?
5. Determine the company's projected benefit obligation at the end of 2003 with respect to
Emily.

[ScottGem]

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