the economic pension expense for magenta rsquo s db plan is closest to 605233
Magenta Corp. is based in the United States and offers its employees a defined-benefit pension plan. The company’s effective tax rate for 2008 is 40 percent. Excerpts from a financial statement footnote on Magenta’s retirement plans are presented in Exhibit 14-15.
EXHIBIT 14-15 Magenta Corp. Defined-Benefit Pension Plan
|
($ millions) |
2008 |
|
Change in benefit obligation |
|
|
Benefit obligation at beginning of year |
$28,416 |
|
Service cost |
96 |
|
Interest cost |
1,557 |
|
Actuarial (gains) losses |
—306 |
|
Prior service cost |
132 |
|
Foreign exchange impact |
—42 |
|
Benefit paid |
—1,332 |
|
Benefit obligations at end of year |
$28,531 |
|
Change in plan a5SerS |
|
|
Fair value of plan assets at beginning of year |
$23,432 |
|
Actual return on plan assets |
1302 |
|
Employer contributions |
693 |
|
Benefit paid |
-1,332 |
|
Fair value of plan assets at the end of year |
$24,105 |
|
Components of net periodic benefit cost |
|
|
Service cost |
$96 |
|
Interest cost. |
1,557 |
|
Expected return plan assets |
—1,874 |
|
Amortization of net actuarial loss |
264 |
|
Net periodic benefit cost |
$43 |
The economic pension expense for Magenta’s DB plan is closest to
a. $135 million
b. $1,251 million
c. $2,509 million