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Homework answers / question archive / Calculating Present Values (L02) Normandin Inc
Calculating Present Values (L02) Normandin Inc. has an unfunded pension liability of $575 million that must be paid in 20 sears. To asses the value of the firm's stock. financial analysts want to ltahihtti hatA to the present. If the relevant discount rate is 6..8%. u het prek.ent thi1
Computation of Present Value of Liability:
Present Value = Future Value / (1+Rate)^Number of Periods
Here,
Future Value = $575 millions
Rate = 6.8% or 0.068
Number of Periods = 20 years
Present Value = $575 / (1+0.068)^20 = $154.26 million
So, Present Value of Liability is $154.26 millions.
