Friendly Companies has an unfunded pension liability of $327 million that must be paid in 16 years. What is the present value of this liability at a discount rate of 6.24 percent?

Question

Quizplus · Accepted Answer

The present value of the liability can be calculated using the formula PV = FV / (1+r)^n, where PV is the present value, FV is the future value, r is the discount rate, and n is the number of years. Plugging in the given values, we get PV = 327,000,000 / (1+0.0624)^16 = $124,147,723.50. Therefore, the best choice is C.

Friendly Companies Has an Unfunded Pension Liability of $327 Million