Question

The Harvest Company sponsors a defined benefit pension plan. The following information pertains to that plan: Projected benefit obligation at January 1, 2019, $250 million; Service cost for 2019, $30 million; Retiree benefits paid (end of year), $35 million; Discount rate, 6%. No change in actuarial estimates occurred during 2019. What is Harvest’s projected benefit obligation at December 31, 2019?
a. $195 million
b. $198 million
c. $200 million
d. $205 million

Answer 1

Answer:

260 million. The answer is not in the available options.

Explanation:

Projected benefit obligation as at January 01, 2018 250

Add: Service cost 30

Add: Interest Cost (250*6%) 15

Less: Retiree benefits paid 35

Projected benefit obligation as at December 31, 2018 260