question archive Normandin Inc
Normandin Inc
Subject:BusinessPrice:2.87 Bought7
Normandin Inc. has an unfunded pension liability of $575 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 6.8 percent, what is the present value of this liability? (Enter your answer in dollars, not millions of dollars. Do not round intermediate calculations and round your final answer to 2 decimal places.)
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Answer:
Present Value = Future value / (1+r)^n
r = 0.068
n = 20 years
= 575 / (1+0.068)^20
= 154.26 mn
