A corporate pension plan has to make the following payments over the next few years: Year 1 2 3 4 Amount ($...

90.2K

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Question

Finance

A corporate pension plan has to make the following payments overthe next few years:
Year 1 2 3 4
Amount ($ million) 16 20 26 34
The appropriate interest rate is 6%.
1. What is the present value of the liability (in $million)?
2. What is the duration of the liability?

Year	1	2	3	4
Amount ($ million)	16	20	26	34

Answer & Explanation Solved by verified expert

4.4 Ratings (832 Votes)

1Present value of the liability Year Annual Payments in Millions Present Value Factor at 6 Present Value 1 16 094340 1509 2 20 089000 1780 3 See Answer

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A corporate pension plan has to make the following payments over the next few years: Year 1 2 3 4 Amount ($...

90.2K

Verified Solution

Question

Finance

A corporate pension plan has to make the following payments overthe next few years:
Year 1 2 3 4
Amount ($ million) 16 20 26 34
The appropriate interest rate is 6%.
1. What is the present value of the liability (in $million)?
2. What is the duration of the liability?

Answer & Explanation Solved by verified expert

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A corporate pension plan has to make the following payments over the next few years: Year 1 2 3 4 Amount ($...

90.2K

Verified Solution

Question

Finance

A corporate pension plan has to make the following payments overthe next few years:Year1234Amount ($ million)16202634The appropriate interest rate is 6%.1. What is the present value of the liability (in $million)?2. What is the duration of the liability?

Answer & Explanation Solved by verified expert

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A corporate pension plan has to make the following payments overthe next few years:
Year 1 2 3 4
Amount ($ million) 16 20 26 34
The appropriate interest rate is 6%.
1. What is the present value of the liability (in $million)?
2. What is the duration of the liability?