Aguilaera Co. maintains a defined benefit plan for its employees where vested employees earn an annual retirement payout of 5.50% of their projected final annual salary for each year worked. Benefits vest each year by 10% until the employee is 100% vested. Assume that new employee Smith earns a starting annual salary of $132,000, but is projected to earn $165,000 annually at her projected retirement date of fifteen years from now. After Smith's first year of service, determine the present value of the PBO retirement cash flow stream, measured at Smith's retirement date, assuming a 20-year retirement period and a 6% discount rate.

Answer rating: 100% (QA)

To calculate the present value of the projected benefit obligation PBO retirement cash flow stream for Smiths retirement we need to calculate the reti... View the full answer