Nerwin, Inc is a furniture manufacturing company with 50 employees. Recently, after a long negotiation with the local labor union, the company decided to initiate a pension plan as a part of its compensation plan. The plan will start on January 1, 2007. Each employee covered by the plan is entitled to a pension payment each year after retirement. As required by accounting standards, the controller of the company needs to report the pension obligation (liability). On the basis of a discussion with the supervisor of the Personnel Dept. and an actuary from an insurance company, the controller develops the following info related to the pension plan.

Average length of time to retirement = 15 yrs
Expected life duration after retirement = 10 yrs
Total pension payment expected each year after retirement for all employees. Payment
made at the end of each year = $700,000 per year
The interest rate to be used is 8%.

On the basis of the info above, determine the present value of the pension obligation (liability).