Question

The EPBO for a particular employee on January 1, 2018, was $30,000. The APBO at the beginning of the year was $6,000. The appropriate discount rate for this postretirement plan is 5%. The employee is expected to serve the company for a total of 25 years with 5 of those years already served as of January 1, 2018. What is the APBO at December 31, 2018? Group of answer choices $7,200. $6,300. $7,560. $7,500.

Answer 1

$7,560

Step-by-step explanation:

Calculation to determine APBO at December 31, 2018.

Using this formula

December 31 APBO=(Beginning EPBO*Discount rate)*6/25

Let plug in the formula

December 31 APBO=($30,000 * 1.05) * 6/25

December 31 APBO= $7,560

Therefore APBO at December 31, 2018 is $7,560