Private pension funds across the world are finding it more difficult to meet their obligations to future retirees. In July 2012, the 100 largest US private pension funds faced a $533bn shortfall, according to the consulting firm Milliman. In the same month, private pensions in the UK faced a £283bn shortfall, according to the government’s insurer of pension plans.

1. Discuss the origin of DCF approaches to investment appraisal techniques. 

2. What is the relationship between pension obligations, the discount rate and future returns?