Question

mprudential, Incorporated, has an unfunded pension liability of $750 million that must be paid in 25 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 10.0 percent, what is the present value of this liability

Answer 1

PV= $69,221,998.63

Step-by-step explanation:

Giving the following information:

Future Value= $750,000,000

Number of periods (n)= 25 years

Discount rate (i)= 10%

To calculate the present value, we need to use the following formula:

PV= FV / (1 + i)^n

PV= 750,000,000 / (1.1^25)

PV= $69,221,998.63