CFA Practice Question

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CFA Practice Question

The Colorado Copper Company sponsors a defined benefit pension plan. The following information pertains to that plan:

Projected benefit obligation on Jan. 1, 2015: $144 million
Service cost for 2015: $36 million
Retiree benefits paid (end of year): $30 million
Discount rate: 10%

No change in actuarial estimates occurred during 2015. What is CCC's projected benefit obligation on December 31, 2015?
Correct Answer: $164.4 million

Beginning balance ($144) + service cost ($36) + interest expense ($144 x 10%) - benefits paid ($30) [in millions]

User Contributed Comments 1

User Comment
quanttrader projected PBO = initial PBO + svc costs + int costs (initial PBO X rate) - payouts
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