The interest cost component of NPPBC is the.

a. increase in the EPBO because of the passage of time
b. increase in the APBO because of the passage of time
c. product of the market related value of plan assets and the expected long term rate of return on the plan
d. change in the APBO during the period.

b. increase in the APBO because of the passage of time.

Explanation:

NPPBC is an acronym for Net Periodic Post-retirement Benefit Cost.

The general rule is the prior service cost should be recognized in NPPBC: by assigning an equal amount of the retroactive benefits to each remain year of service from the plan amendment date to the full eligibility date of each active participant.

Hence, the interest cost component of NPPBC is the increase in the Accumulated Post-retirement Benefit Obligation (APBO) because of the passage of time

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