Problem - Century-Fox Corporation's employees are eligible for postretirement health care benefits after both being employed at the end of the year in which age 60 is attained and having worked 20 years. Jason Snyder was hired at the end of 1990 by Century-Fox at age 34 and is expected to retire at the end of 2018 (age 62). His retirement is expected to span five years (unrealistically short in order to simplify calculations). The company's actuary has estimated the net cost of retiree benefits in each retirement year as shown below. The discount rate is 6%. The plan is not prefunded. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)
Year Expected Age Net Cost
2019 63 $4,000
2020 64 4,400
2021 65 2,300
2022 66 2,500
2023 67 2,800
Assume costs are incurred at the end of each year.
1. Calculate the present value of the net benefits as of the expected retirement date.
2. With respect to Snyder, what is the company's expected postretirement benefit obligation at the end of 2013?
3. With respect to Snyder, what is the company's accumulated postretirement benefit obligation at the end of 2013?
4. With respect to Snyder, what is the company's accumulated postretirement benefit obligation at the end of 2014?
5. What is the service cost to be included in 2014 postretirement benefit expense?
6. What is the interest cost to be included in 2014 postretirement benefit expense?
7. What is the interest cost to be included in 2014 postretirement benefit expense?