FINANCE instructions I help HOMEWORK 1 Question 33 (of 100) Save & Exit Submit 3
ID: 2816617 • Letter: F
Question
FINANCE instructions I help HOMEWORK 1 Question 33 (of 100) Save & Exit Submit 33. 100 points You did not receive full credit for this question in a previous attempt N Problem 4-10 Calculating Present Values [LO 2] imprudental,Inc., has an unfunded pension iability of $763 million that must be paid in 15 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 7 percent, what is the present value of this liability? (Enter your answer in dollars, not millions of dollars, 1,234,567. Do not round intermediate calculations and round your answer to 2 decimal places, e.g, 32.1 the present value of this liability? (Enter your answer in dollars, not millions of dollars, o.g Present value 276.54 Hints References eBook & Resources Hint #1 Hint 82 Ask your instructor a question Previous.attemptExplanation / Answer
Solution:
Future value of pension liability(FV)=$76,30,00,000
Time period (n)=15 years
Discount rate(r)=7%
Present value (PV)=??
PV=FV/(1+r)^n
PV=76,30,00,000/(1+0.07)^15
PV=76,30,00,000*0.3624460196
PV=$27,65,46,312.95
Present value of pension liability=$27,65,46,312.95
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.