Imprudential, Inc., has an unfunded pension liability of $800 million that must be paid in 21 years. To assess the value of the

Question

4 years ago

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Imprudential, Inc., has an unfunded pension liability of $800 million that must be paid in 21 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 5.5 percent, what is the present value of this liability

Business

1 answer:

Sunny_sXe [5.5K] · Answer 1 · 2021-12-25T15:35:51+03:00

Answer:

PV= $259.89 million

Explanation:

Giving the following information:

Future Value= $800 million

Number of periods= 21 years

Relevant discount rate= 5.5 percent

<u>To calculate the present value, we need to use the following formula:</u>

PV= FV/(1+i)^n

PV= 800/1.055^21

PV= $259.89 million