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Pension Fund Retirement Accounts Use the Present Value of an Annuity

question 48

True/False

Pension fund retirement accounts use the present value of an annuity to calculate the ending value upon retirement.


Definitions:

Required Return

The smallest percentage of annual gain required from an investment to attract individuals or corporations to fund a certain project or venture.

Wealth

The abundance of valuable financial assets or physical possessions which can be converted into a form that can be used for transactions.

Discounted Payback

The period of time it takes for the sum of the discounted cash flows to pay back the initial investment.

Payback

The amount of time it takes for an investment to generate enough returns to recover the original investment cost.

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