Plan Funding

Consolidated Industries is planning to operate for $10$ more years and then cease operations. At that time $($in $10$ years$),$ it expects to have the following pension benefit obligations:

The current value of the firm's pension fund is $$5\mathrm{.}5$ million. Assume that all cash flows occur at year$-$end.

a$.$ Consolidated's expected return on pension assets is $9\%,$ and it uses $9\%$ to discount the expected pension benefit payments. What is the present value of the firm's pension fund benefits? Do not

round intermediate calculations. Round your answer to the nearest dollar.

$

b$.$ Is the plan underfunded or overfunded? Do not round intermediate calculations. Round your answer to two decimal places.

Funding ratio $=$

which means the assets are $--$select$-$ than the PV of benefits and the plan is

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