When You Retire 40 Years from Now,you Want to Have

question 4

Multiple Choice

When you retire 40 years from now,you want to have $1.2 million.You think you can earn an average of 12 percent on your investments.To meet your goal,you are trying to decide whether to deposit a lump sum today,or to wait and deposit a lump sum 2 years from today.How much more will you have to deposit as a lump sum if you wait for 2 years before making the deposit?

• A)$1,414.14
• B)$2,319.47
• C)$2,891.11
• D)$3,280.78
• E)$3,406.78

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Definitions:

Operating Leverage

The degree to which a firm can use fixed operating costs to magnify the effects of changes in revenue on its operating income.

Salesvolume

Refers to the total number of units sold within a specific period.

Net Operating Income

The profit generated from a business's operations after subtracting operating expenses, but before interest and taxes.

Degree Of Operating Leverage

A financial ratio that measures the sensitivity of a company's operating income to a change in its sales volume.