Pension data for Fahy Transportation Inc. include the following: ($ in millions) Discount rate, 8% Expected return on plan assets, 11% Actual return on plan assets, 12% Projected benefit obligation, January 1 $ 780 Plan assets (fair value), January 1 750 Plan assets (fair value), December 31 800 Benefit payments to retirees, December 31 71 Required: Assuming cash contributions were made at the end of the year, what was the amount of those contributions

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Business

Steven Woods

29 May, 23:00

Pension data for Fahy Transportation Inc. include the following: ($ in millions) Discount rate, 8% Expected return on plan assets, 11% Actual return on plan assets, 12% Projected benefit obligation, January 1 $ 780 Plan assets (fair value), January 1 750 Plan assets (fair value), December 31 800 Benefit payments to retirees, December 31 71 Required: Assuming cash contributions were made at the end of the year, what was the amount of those contributions

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Jovanny Hays · Answer 1

The amount of those contributions were $38.5 millions

Explanation:

According to the given data we have the following:

Plan assets (fair value), December 31=$800

Benefit payments to retirees, December 31=$71

Plan assets (fair value), January 1=$750

Actual return on Plan assets = $750*11% = $82.50

In order to calculate the cash contributions, we have to make the following calculation:

cash contributions=$800+$71 - $750-$82.50

cash contributions=$38.5 millions

The amount of those contributions were $38.5 millions