Answered: What is the definition of “actuarial…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 16Q: What is the definition of present value?

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What is the definition of “actuarial present value”?

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Accumulated Benefit Obligation: It is an inexact rate of a company's pension plan liability towards the employee. The accumulated benefit obligationis an estimated value of future pension plan liability based on the assumption that the pension plan is ended with immediate effect and, it does not consider any increase in the value of future salary.

Post-retirement benefit plan: A fixed sum of money, receivable in future or after the age of retirement, which the beneficiary has invested during the period of employment, is termed as post-retirement benefit plan. This pension is mostly offered to government, public sector and some private sector employees.

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