Imprudential, Inc., has an unfunded pension liability of $767 million that must

Question

Imprudential, Inc., has an unfunded pension liability of $767 million that must be paid in 20 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 10 percent, what is the present value of this liability? (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
  
Present value            $  

Explanation / Answer

Present value of this liability=$767,000,000*Present value of discounting factor(10%,20)

=$767,000,000/1.1^20

=$767,000,000*0.148643628

which is equal to

=$114,009,662.70(Approx).

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