The Main Purpose of Using a Tax-Sheltered Retirement Account to Invest

question 151

Multiple Choice

The main purpose of using a tax-sheltered retirement account to invest for retirement is to

• A)have the government ultimately collect more in taxes from you.
• B)leave more money to your heirs.
• C)provide your employer with a tax-deduction.
• D)let you accumulate more money for retirement.

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Definitions:

Sustainable Growth Rate

The maximum rate at which a company can grow its revenues and profits without increasing financial leverage or external equity.

Retention Ratio

The share of net income not disbursed as dividends to shareholders but rather reserved by the business for various uses.

Dividend Payout Ratio

The fraction of net income a firm pays to its shareholders in the form of dividends, compared to the portion reinvested in the business.

Percentage of Sales Approach

A method used in financial forecasting to estimate various elements of a financial statement as a percentage of forecasted sales.