Problem 5-14 (Algo) Deferred annuities; pension obligation [LO5-8, 5-10]Three employees of the Horizon Distributing Company will receive annual pension payments from the company when they retire. Theemployees will receive their annual payments for as long as they live. Life expectancy for each employee is 14 years beyondretirement. Their names, the amount of their annual pension payments, and the date they will receive their first payment are shownbelow:EmployeeTinkersEversChanceAnnualPayment$ 23,00028,00033,000Required:1. Compute the present value of the pension obligation to these three employees as of December 31, 2024. Assume an 11% interestrate.2. The company wants to have enough cash invested at December 31, 2027, to provide for all three employees. To accumulateenough cash, they will make three equal annual contributions to a fund that will earn 11% interest compounded annually. The firstcontribution will be made on December 31, 2024. Compute the amount of this required annual contribution.Date of FirstPayment12/31/202712/31/202812/31/2029Note: For all requirements, use tables, Excel, or a financial calculator. Do not round intermediate calculations. Round your finalanswers to nearest whole dollar amount. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)X Answer is not complete.Employee1. Tinkers1. Evers1. Chance2. Amount of annual contribution$PV117,418 x

Pension is defined as the fund collected from the taxpayer or employee during his term of…

Answered: Three employees of the Horizon…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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