Example: Assets: PV = +$1000 Income: $100 Expenses: $50 Target portolio value: FV = -$2000 N: 5 years Do you put in +$50 as PMT when calculating return objective in IPS? There was a case in the shweser '09 practice exams, volume 2, exam 3 morning session that entered 0 as PMT in calc, but that does not seem intuitive as you deduct expenses if expenses are greater. Can anyone point to another example where income > expenses and there is a target future portfolio value?
like this is realistic…no one lives beneath their means, especially in this industry
You would only put the +50 into the TVM if it said something to the effect of: “Mr. Johnson lives well beneath his means and as such contributes $50 of his annual income to his investment portfolio every year” otherwise it should be zero because it doesn’t indicate that he’s throwing this 50 bucks towards the investments… he could be shoving it under his mattress for all we know. At least that’s my take