Question
A corporate pension plan has to make the following payments over the next few years: Year 1 2 3 4 Amount ($ million) 21 25
A corporate pension plan has to make the following payments over the next few years:
| Year | 1 | 2 | 3 | 4 |
|---|---|---|---|---|
| Amount ($ million) | 21 | 25 | 31 | 39 |
The appropriate interest rate is 9%.
Part 1
What is the present value of the liability (in $ million)?
Part 2
What is the duration of the liability?
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The Theory Of Interest
Authors: Friedrich A. Lutz
2nd Edition
1138539074,1351472836
