return objective in IPS question understand, objective, question, someone

ayaz_mahmud369

Reading 14 book 2 cfai pg 155. Problem 13 return objective.
Pls someone explain how u get a pretax return of 4.427 %. I understand how u get -26k expenses. I understand portfolio value of 1235k. How do u come up with return ??
I know it’s probably easy but I’m fried.

pimpineasy

never mind you have to PV the damn thing.

former

I don’t understand this either. What are you PVing?

Carson

Because you are told that they need a fixed amount of money when they retire…whenever you see a set amount that needs to be available at some point in the future (this could also apply to a specified bequest preference) PV has to be used.