To Assess the Current Value of a Lump-Sum Retirement Benefit

question 92

Multiple Choice

To assess the current value of a lump-sum retirement benefit that will be received in 10 years, use the ____________ calculation.

• A) present value of annuity
• B) present value of a single amount
• C) future value of an annuity
• D) future value of a single amount
• E) retained earnings

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Definitions:

Utility Function

A mathematical representation in economics that assigns a value to each possible choice or bundle of goods to reflect the satisfaction or happiness a consumer derives from it.

Consumption

The application of goods and services by domestic units.

Interest Rate

The percentage of a sum of money charged for its use, determining the cost of borrowing or the return on investment.

Income

Earnings received by an individual or entity, typically through wages, investments, or business activities, over a certain period.