Junior Ltd Employs Three Workers to Develop and Test Games

Junior Ltd employs three workers to develop and test games.The employees are currently earning $30 000 each and are expected to cease their employment in 20 years.At the end of their employment each employee is entitled to a lump sum payment equal to 10% of their final salary.Actuarial analysis suggests salaries will increase evenly at a rate of 5% per year over the 20 years.At the end of the 20 years Junior's undiscounted obligation is $477 593.Assuming an interest rate of 8%,calculate the obligation that would be recorded at the end of year 1 (rounded to the nearest dollar) .

A) $5123
B) $23 898
C) $21 986
D) $102 466

Correct Answer:

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Access For Free