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A pension plan is obligated to make disbursements of $6 million, $4 million, and $3 million...

A pension plan is obligated to make disbursements of $6 million, $4 million, and $3 million at the end of each of the next three years, respectively. Find the duration of the plan's obligations if the interest rate is 13.0% annually. (Round your answer to 4 decimal places.)
  Duration years
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Answer #1
Duration of plan Present value of cash flow/(PV of cash flow*t)
In million
Time (t) Cash flow Discount factor @ 13% Present value (Cash flow*Discount factor) PV of cash flow*t
1 $6.00 0.88496 $5.31 $5.31
2 $4.00 0.78315 $3.13 $6.27
3 $3.00 0.69305 $2.08 $6.24
Total $10.52 $17.81
Duration 17.81/10.52
Duration 1.6930
Thus, duration is 1.6930 years
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