economic net worth

问题如下：

Henri Blanc is a financial adviser serving high-net-worth individuals in the United States. Alphonse Perrin, age 55, meets with Blanc for advice about coordinating his employee benefits with his investment and retirement planning strategies. Perrin has adopted a life-cycle portfolio strategy and plans to retire in 10 years. Recently, he received a promotion and $50,000 salary increase to manage a regional distribution center for a national retail firm. Perrin’s spending needs are currently less than his annual income, and he has no debt. His investment assets consist of $2,000,000 in marketable securities (90% equity/10% fixed income) and a vineyard with winery valued at $1,500,000.

Blanc leads Perrin through a discussion of the differences between his financial capital and his human capital, as well as between his traditional balance sheet and his economic balance sheet. Perrin is vested in a defined benefit pension plan based on years of service and prior salary levels. Future benefits will vest annually based on his new salary. Perrin makes the following statements regarding his understanding of pension benefits.

Statement 1 Unvested pension benefits should be classified as human capital.

Statement 2 Vested pension benefits should not be classified as financial capital until payments begin.

Perrin asks Blanc to compare his traditional and economic balance sheets. Blanc calculates that the sum of the present values of Perrin’s consumption goals and bequests exceeds that of his unvested pension benefits and future earnings.

Perrin tells Blanc that he expects a slower rate of growth in the US economy. Perrin expresses the following concerns to Blanc.

Concern 1: Holding all else equal, I wonder what the effect will be on my human capital if the nominal risk-free rate declines?

Concern 2: My employer projects a slower rate of sales growth in my region; therefore, I am anxious about losing my job.

Perrin is a widower with three adult children who live independently. Perrin’s oldest son wishes to inherit the vineyard; the two other children do not want to be involved. Perrin would like to accommodate his children's wishes; however, he wants each child to inherit equal value from his estate. Blanc explains potential uses of life insurance to Perrin and suggests that one of these uses best meets Perrin’s immediate needs.

Perrin expresses a preference for a life insurance policy that provides a range of investment options. Perrin selects a policy and asks Blanc to calculate the net payment cost index (per $1,000 of face value, per year), using a life expectancy of 20 years and a discount rate of 5%. Table 1 provides information about Perrin’s policy.

Blanc’s calculations show that Perrin’s economic net worth is:

选项：

A.

less than his net worth.

B.

equal to his net worth.

C.

greater than his net worth.

解释：

A is correct.

Net wealth is calculated as follows:

Net wealth = Net worth from the traditional balance sheet +(Present value of future earnings + Present value of unvested pension benefits) – (Present value of consumption goals + Present value of bequests)

Perrin’s net wealth is less than his net worth because the sum of the present values of consumption and bequests is greater than the sum of the present values of future earnings and unvested pensions.