Final answer:
The projected benefit obligation (PBO) of the Colorado Copper Company's defined benefit pension plan at the end of 2021 is calculated by adding the service cost to the beginning PBO and subtracting the retiree benefits paid, without accounting for the discount rate. The resulting PBO is $5150 million.
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Step-by-step explanation:
The Colorado Copper Company (CCC) operates a defined benefit pension plan. To calculate the projected benefit obligation (PBO) at the end of the year, one must take into account the PBO at the beginning of the year, service cost for the year, retiree benefits paid, and the discount rate. However, since no change in actuarial estimates occurred during 2021, the calculation becomes more straightforward:
Start with the PBO at the beginning of the year, which is $5144 million.
Add the service cost for 2021, which is $36 million.
Subtract the retiree benefits paid at the end of the year, which is $30 million.
Interest or discount does not need to be considered as the typical process would involve accruing interest over the year and then deducting benefits paid, but since benefits are paid at the end of the year, they offset the interest accrued. Thus, the PBO at the end of 2021 would be:
PBO at January 1, 2021: $5144 million
+ Service cost for 2021: $36 million
- Retiree benefits paid: $30 million
PBO at December 31, 2021: $5150 million