A combined heat and power plant of Belmondane must be decommissioned in 10 years, at a cost estimated at 2,500,000 at that date's prices, already adjusted for the risks specific to decommissioning. The pre-tax rate reflecting the time value of money is 4%; the corresponding post-tax rate is 3%. What provision does Belmondane recognise today (rounded to the nearest unit)?
- Expected decommissioning cost
- 2,500,000
- Pre-tax rate (%)
- 4 %
- Years until decommissioning
- 10
- Post-tax rate (%)
- 3 %