Imprudential,Inc

question 35

Multiple Choice

Imprudential,Inc.has an unfunded pension liability of $850 million that must be paid in 25 years.To assess the value of the firm's stock,financial analysts want to discount this liability back to the present.The relevant discount rate is 6.5 percent.What is the present value of this liability?

• A)$159,803,162
• B)$171,438,907
• C)$176,067,311
• D)$184,519,484
• E)$191,511,367

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Definitions:

Isoquant

A curve that represents all combinations of inputs that produce the same level of output in production theory.

Output

The amount of goods or services produced by a company, industry, or economic system.

Production Function

A mathematical representation in economics that describes the relationship between the inputs used in production and the output of goods or services produced.

Returns To Scale

The change in output resulting from a proportionate increase in all inputs in the production process.