Becky Graduated with a Master's Degree in Personal Financial Planning

question 2

Multiple Choice

Becky graduated with a master's degree in personal financial planning.After working for two years in a small financial planning firm,Becky earns $60,000 annually and saves $10,000 a year after spending on her current needs.What is her average propensity to consume?

• A)16.7%
• B)25.5%
• C)75.7%
• D)83.3%
• E)95.5%

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Definitions:

Profitability Index

A calculation used to determine the relative profitability of an investment, based on the present value of future cash flows divided by the initial investment cost.

Internal Rate

Often refers to internal rate of return (IRR), a financial metric used to estimate the profitability of potential investments.

Cash Inflows

The money received by a business from its various sources during a specific period, such as sales revenue, investments, and financing.

Operating Costs

The expenses associated with the day-to-day functioning of a business, including salaries, utilities, and rent.