Imprudential,Inc.has an unfunded pension liability of $850 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.The relevant discount rate is 6.5 percent.What is the present value of this liability?
A)$159,803,162
B)$171,438,907
C)$176,067,311
D)$184,519,484
E)$191,511,367

Question

Quizplus · Accepted Answer

PV = $850,000,000 × [1/(1.065)²⁵] = $176,067,311