Hi, thank you for the video. I however got lost when accumulating 8488x1.07^14 = 21 886. I could not relate this number to the PBO at the end of working for 16 years 10 929 (pmt 1556, i = 7, n 10, fv = 0) . Please assist. Many thanks
Shouldn’t the current service cost be the PV of defined benefit at retirement divided by total years of service (i.e. 10943/15) then be present valued at 7% for 14 years? The current service cost from year 1 to year to should approximate $282 this way?
Jason has already worked for 1 year = 100k and it is estimated that he will work for another 15 years, 16 years of work in total. So the calculation here is correctly posted for 15 years of increase @ 3% annually.
Earned benefit shouldn't be added to a previous earned benefit amount. It's just one amount that can change. The employee is only getting paid one annuity when they retire.
@@Vicsar212 I think they can add earned benefit to the previous amount since it only reflects the added future liability to the company, as a result of the employee working one additional year. It is the same as the first year, since the added liability is the same (i.e. a promise to pay annually until death; 1% of final salary of $155797 or $1558 per year).
Nicely explained! Appreciated👍🏻👍🏻👍🏻👍🏻
Thanks for liking
Much better and in-depth explanation compared to third party cfa notes
Excellent video, thank you so much.
Beautiful example.
Hi, thank you for the video. I however got lost when accumulating 8488x1.07^14 = 21 886. I could not relate this number to the PBO at the end of working for 16 years 10 929 (pmt 1556, i = 7, n 10, fv = 0) . Please assist. Many thanks
Shouldn’t the current service cost be the PV of defined benefit at retirement divided by total years of service (i.e. 10943/15) then be present valued at 7% for 14 years? The current service cost from year 1 to year to should approximate $282 this way?
Is it 100000*1.03^*15*? or is it "^14"? The salary increase happens at end of year for the next year, so wouldn't it be 15-1?
Jason has already worked for 1 year = 100k and it is estimated that he will work for another 15 years, 16 years of work in total. So the calculation here is correctly posted for 15 years of increase @ 3% annually.
Can anyone see a big mistake in the video?
Earned benefit shouldn't be added to a previous earned benefit amount. It's just one amount that can change. The employee is only getting paid one annuity when they retire.
@@Vicsar212 I think they can add earned benefit to the previous amount since it only reflects the added future liability to the company, as a result of the employee working one additional year. It is the same as the first year, since the added liability is the same (i.e. a promise to pay annually until death; 1% of final salary of $155797 or $1558 per year).