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DaniilM [7]
4 years ago
11

Imprudential, Inc., has an unfunded pension liability of $800 million that must be paid in 24 years. To assess the value of the

firm's stock, financial analysts want to discount this liability back to the present. If the relevant discount rate is 9.0 percent, what is the present value of this liability
Business
2 answers:
Anon25 [30]4 years ago
7 0

Answer:

101.12 million

Explanation:

<em>The present value of a future cash flow is the amount that can be invested today at a particular rate for a certain number of years to have the future cash flow </em>

The present value of the liability

= FV × (1+r)^(-n)

= 800  × (1.09)^(-24)

= 101.12 million

The present value of this liability= 101.12 million

zmey [24]4 years ago
4 0

Answer:

Correct answer is option e. =$101123952.6

Explanation:

Correct answer is option e.

Calculation of Present value of pension liability

Present value = Liability amount * PVIF,24, 9%

$101123952.6

Note

-The formula for calculating the Present Value Inflow Factor (PVIF) is [1 / (1 + r)n], where “r” is Discount rate and “n” is the maturity year

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Assume that the risk-free rate is 8 percent, the required rate of return on the market (or an average-risk stock) is 13 percent,
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Answer:

22.7 %

Explanation:

We can solve two of the problems using Capital Asset Pricing Model (CAPM) which is as follows:

Ra= Rf + (Rm-Rf)*B

Where,

Ra= Rate of return on stock

Rm= Rate of return on market

Rf= Risk Free rate

B= Beta coefficient of stock

Now we can move for your problem

Prob1) Ra= .15, Rf= .08, Rm= .13, B= ?

.15=.08+(.13-.08)B

Therefore, beta Coefficient = 1.4              

Prob2: Ra= ?, Rf= .04, Rm= .15, B=1.7

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Therefore, Ra=0.227 = 22.7 %

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3 years ago
Over the past decade, household debt has
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The household debt has Risen
7 0
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Alpha Corporation and Beta Corporation have just purchased identical pieces of equipment. Each firm estimates that the equipment
Firdavs [7]

Answer:

B) Alpha’s net income will be lower that Beta’s during the fourth year of the equipment’s service life.

5 0
4 years ago
Which of the following is true concerning federal budget deficits? I. The IRS spends more than it collects in taxes in a given y
ale4655 [162]

Answer:

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I hope my answer helps you

7 0
3 years ago
g Texas Corporation purchases a piece of equipment on January 1 for $300,000 and the equipment has an expected useful life of te
Vikki [24]

Answer:

$108,000

Explanation:

For computing the accumulated depreciation for the end of the second year

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