Interest cost = PBO * Discount rate
If Discount rate increases, PBO will decrease.
How about interest cost, down or up? (down * up)
Interest cost = PBO * Discount rate
If Discount rate increases, PBO will decrease.
How about interest cost, down or up? (down * up)
What is your quesion?
Btw, Schweser page 110 says
USUALLY reduce interest cost… not sure why.
For mature firms only ,the increase in interest cost due to increase in discount rate over powers the decrease in pbo due to increase in discount rates.