Consider a pension plan that pays beneficiaries in the following manner : at the end of the retirement year of a beneficiary the value of all benefits are transferred to his or her personal account . This means that at the end of every year the pension plan makes lump- sum payments* of pension benefits to its beneficiaries . The pension plan's actuarial team concluded that the pension's Obligation Stream could not be estimated beyond an 80 - year horizon . They further estimate that the plan will have to make annual pension payments of $ 10 million per year throughout this 30- year horizon . The first payment will take place in exactly one year . Assume* the current yield curve is flat at $96 . In your calculations , USE dollar Heures rather than millions* of dollars . 1) What is the duration of the plan's expected obligation stream ? 2) Assume that the pension plan hired a new actuarial team that revised the calculations in I'll and found that the present value of expected pension obligations in the next century is $ 150 million with a 22 - year duration . You decide to utilize an immunization strategy for this obligation that exclusively involves two bonds I and