Question

Can someone explain this to me.

I have a question stating

The budget directo ask, "what are the net present value of the unfunded liability and the ratio of assets to the net present value of the unfunded liability, given the current situation? This is the base case.' How bad are things right now?

This is the data I have

INPUTS
Cost of Living Adjustment	0.03
Long Term Rate of Return	0.075
Productivity Factor	0.005
Employee Contribution Rate	0.095
Final Salary Give Back	$                               -
State Contribution Factor	2.5
SUMMARY OF KEY RESULTS
NPV of Unfunded Liability	$62,105,471,741
Ratio of Assets to Liability NPV	66%

Im not exactly sure how to eexplain if this is bad or not.

Thank, I hope this is enough information

Answer 1

As can be seen from the table that the net present value of unfunded liability is $62,105,471,741. The ratio of assets to the net present value of unfunded liability is merely 66%. This means that the assets value is ($62,105,471,741 x 66%) = $40,989,611,349.

Thus, from the above it is clear that the total assets are relatively less compared to the net present value of unfunded liability. This is a very bad situation as the assets in hand is relatively less compared to the net present value of unfunded liability. Thus, it shows that the inability in payment of unfunded liability.