Answer:
This problem requires us tell how much is owed after 1 year, 3 years, 7 years, and 20 years. This can be calculated using simple compounding formula given below.
Liability after 1 year
DF = $ 325 (1+4%)^1 = $ 338
Liability after 3 year
DF = $ 325 (1+4%)^3 = $ 366
Liability after 7 year
DF = $ 325 (1+4%)^7 = $ 428
Liability after 20 year
DF = $ 325 (1+4%)^20 = $ 712
