Maggie Moo, age 40, begins employment with Farm Corporation on January 1, 2017 at a starting salary of $40,000. It is expected that Maggie will work for the company for 25 years, retiring on December 31, 2041, when Maggie is 65 years old. It is expected that her salary at retirement will be $140,000. Further assume that mortality tables indicate the life expectancy of someone age 65 in 2041 is 12 years. Farm Corporation sponsors a defined benefit pension plan with the following formula: Annual pension benefit on retirement - 3% of salary for each year of service, or 3% final salary x years of service. Assume a discount rate of 6%. Determine the current service cost for Maggie Moo at December 31, 2017. Options a. 4,200 b. 8,212.66 c. 8,696.69 d. 35,212.12 Frank Corporation has an asset with a fair market value of $200,000 that it wants to lease. Frank's wants to recover its net investment in the leased asset and earn a 10% return. The asset will revert back to Frank's at the end of a 6-year lease term. If Frank's charges rent annually at the beginning of the year, what should amount should the annual rent be (rounded to whole dollars)? Options a) $18,817 b) $33,333 c) $41,747 d) $53,333 At the end of 2017, Lime Inc. has determined the following adjusted information related to its defined benefit pension plan: Defined benefit obligation............ Fair value of pension plan assets. The corporation uses IFRS. Assume the net defined benefit liability/asset account at January 1, 2017 was nil. If the contribution to plan assets in 2017 is $410,000, the pension expense for 2017 is Options a) $100,000 b) 310,000 c) 410,000 d)510,000 $1,320,000 1,220,000 At January 1, 2017, Van Gogh Corp.'s defined benefit pension plan, under IFRS, had a defined benefit obligation of $100,000, while the fair value of the plan assets was $120,000. During 2017, the plan's current service cost was $150,000; past service costs were $80,000; Van Gogh contributed $110,000 to the plan; the actual and expected return on the plan assets was $9,000; and benefits paid to retirees were $95,000. What is the fair value of the plan assets at December 31, 2017? Options a) $239000 b) 205,000 c) $144,000 d) $135,000
Maggie Moo, age 40, begins employment with Farm Corporation on January 1, 2017 at a starting salary of $40,000. It is expected that Maggie will work for the company for 25 years, retiring on December 31, 2041, when Maggie is 65 years old. It is expected that her salary at retirement will be $140,000. Further assume that mortality tables indicate the life expectancy of someone age 65 in 2041 is 12 years. Farm Corporation sponsors a defined benefit pension plan with the following formula: Annual pension benefit on retirement - 3% of salary for each year of service, or 3% final salary x years of service. Assume a discount rate of 6%. Determine the current service cost for Maggie Moo at December 31, 2017. Options a. 4,200 b. 8,212.66 c. 8,696.69 d. 35,212.12 Frank Corporation has an asset with a fair market value of $200,000 that it wants to lease. Frank's wants to recover its net investment in the leased asset and earn a 10% return. The asset will revert back to Frank's at the end of a 6-year lease term. If Frank's charges rent annually at the beginning of the year, what should amount should the annual rent be (rounded to whole dollars)? Options a) $18,817 b) $33,333 c) $41,747 d) $53,333 At the end of 2017, Lime Inc. has determined the following adjusted information related to its defined benefit pension plan: Defined benefit obligation............ Fair value of pension plan assets. The corporation uses IFRS. Assume the net defined benefit liability/asset account at January 1, 2017 was nil. If the contribution to plan assets in 2017 is $410,000, the pension expense for 2017 is Options a) $100,000 b) 310,000 c) 410,000 d)510,000 $1,320,000 1,220,000 At January 1, 2017, Van Gogh Corp.'s defined benefit pension plan, under IFRS, had a defined benefit obligation of $100,000, while the fair value of the plan assets was $120,000. During 2017, the plan's current service cost was $150,000; past service costs were $80,000; Van Gogh contributed $110,000 to the plan; the actual and expected return on the plan assets was $9,000; and benefits paid to retirees were $95,000. What is the fair value of the plan assets at December 31, 2017? Options a) $239000 b) 205,000 c) $144,000 d) $135,000
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Transcribed Image Text:1. Maggie Moo, age 40, begins employment with Farm Corporation on January 1, 2017 at
a starting salary of $40,000. It is expected that Maggie will work for the company for
25 years, retiring on December 31, 2041, when Maggie is 65 years old. It is expected
that her salary at retirement will be $140,000. Further assume that mortality tables
indicate the life expectancy of someone age 65 in 2041 is 12 years. Farm Corporation
sponsors a defined benefit pension plan with the following formula: Annual pension
benefit on retirement = 3% of salary for each year of service, or 3% final salary x years
of service. Assume a discount rate of 6%. Determine the current service cost for
Maggie Moo at December 31, 2017.
Options a. 4,200 b. 8,212.66 c. 8,696.69 d. 35,212.12
2. Frank Corporation has an asset with a fair market value of $200,000 that it wants to
lease. Frank's wants to recover its net investment in the leased asset and earn a 10%
return. The asset will revert back to Frank's at the end of a 6-year lease term. If Frank's
charges rent annually at the beginning of the year, what should amount should the
annual rent be (rounded to whole dollars)?
Options a) $18,817 b) $33,333 c) $41,747 d) $53,333
3. At the end of 2017, Lime Inc. has determined the following adjusted information
related to its defined benefit pension plan:
. $1,320,000
1,220,000
Defined benefit obligation...........
Fair value of pension plan assets
The corporation uses IFRS. Assume the net defined benefit liability/asset account at
January 1, 2017 was nil. If the contribution to plan assets in 2017 is $410,000, the
pension expense for 2017 is
Options a) $100,000 b) 310,000 c) 410,000 d)510,000
4. At January 1, 2017, Van Gogh Corp.'s defined benefit pension plan, under IFRS, had a
defined benefit obligation of $100,000, while the fair value of the plan assets was
$120,000. During 2017, the plan's current service cost was $150,000; past service costs
were $80,000; Van Gogh contributed $110,000 to the plan; the actual and expected
return on the plan assets was $9,000; and benefits paid to retirees were $95,000. What
is the fair value of the plan assets at December 31, 2017?
Optiions a) $239000 b) 205,000 c) $144,000 d) $135,000
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 5 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education