amqata

The reason why we use FV = 100,000,000 in the final step of the equation is because that is what the par value is on the bonds that were purchased to immunize the portfolio. In this case, we are simply going through bond pricing techniques, and thus, we must find the interest rate that would push the current market value of the bonds to equal the PV of the liability to be immunized.
Because we know that with rates at 11%, the PV of the liability is 78,676,000, we can figure out what interest rate would push the market value of the bonds to that level. Because this last step involves actually pricing the bond, we need to recognize that the bond has 20 periods.
11.7% is the correct answer.