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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 ($...

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Finance

A corporate pension plan has to make the following payments overthe next few years:

Year1234
Amount ($ million)16202634

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
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 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?

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