Worldatwork Exam T7 Topic 2 Question 84 Discussion

Actual exam question for Worldatwork's T7 exam

Question #: 84
Topic #: 2

Which of the following should be used when discounting a benefit in order to determine the present value of the defined benefit obligation and the current service cost?

AFair value

BTime value of money

CNet present value

DThe corporate vision

Show Suggested Answer

Suggested Answer: C

by Glenn at Apr 08, 2024, 06:16 PM

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Antione

7 months ago

I believe fair value is used for other purposes, not specifically for discounting benefits.

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Pa

7 months ago

But what about A) Fair value, wouldn't that also be important in determining the present value?

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Ardella

7 months ago

I agree with User 1, because discounting a benefit involves considering the time value of money.

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Amber

7 months ago

I think the correct answer is B) Time value of money.

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Marti

8 months ago

Net present value? Are you kidding me? That's basically the same thing as the time value of money. I think you're overcomplicating this, my friend. It's gotta be B - time value of money, all the way.

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Kristofer

8 months ago

I don't know, you guys. What about net present value? Isn't that also a way to discount future benefits? I'm kind of torn between B and C here. Anyone have any thoughts?

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Shakira

6 months ago

A) Fair value is used to determine the market value of assets, not to discount future benefits.

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Ma

7 months ago

C) Net present value is used in investment decisions, not for discounting benefits.

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Ronnie

7 months ago

B) Time value of money is the correct way to discount future benefits.

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Haha, yeah, this exam is probably designed to trip us up. I mean, who even considers the corporate vision when discounting a benefit? That's just absurd. I'm with you guys - option B is the way to go.

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Mitzie

8 months ago

Ooh, this is a good one! I think the answer has to be B - time value of money. That's the classic way to discount future benefits to get the present value. Unless this exam is trying to trick us, in which case all bets are off!

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Kristeen

8 months ago

Well, the question is clearly asking about how to determine the present value of a defined benefit obligation, so I think the time value of money is a key factor. I'm leaning towards option B, but I want to hear what the others think.

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Bok

8 months ago

Hmm, this question seems a bit tricky. I'm pretty sure the answer has something to do with discounting the benefit, but I'm not sure which approach to use. The time value of money seems important, but I'm not sure if that's the whole story.

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Worldatwork Exam T7 Topic 2 Question 84 Discussion

Contribute your Thoughts:

Antione

Pa

Ardella

Amber

Marti

Kristofer

Shakira

Ma

Ronnie

Bulah

Mitzie

Kristeen

Bok