Al,Ralph,and Stan Are All Intending to Retire

question 179

Multiple Choice

Al,Ralph,and Stan are all intending to retire.Each currently has $1 million in assets.Al will earn 16% interest and retire in two years.Ralph will earn 8% interest and retire in four years.Stan will earn 4% interest and retire in eight years.Who will have the largest sum when he retires?

• A)Al
• B)Ralph
• C)Stan
• D)They all retire with the same amount.

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Definitions:

Constant Ratio

A strategy involving maintaining a fixed percentage allocation among different asset classes.

Dividend Payout Ratio

A financial metric that shows the percentage of earnings a company distributes to its shareholders in the form of dividends.

Profit Margin

A financial metric indicating the percentage of revenue that exceeds the costs associated with making and selling the product, calculated as net income divided by revenue.

Projected Addition

Projected addition refers to the estimated increase or expansion in a company's assets, revenues, or capabilities, based on future plans or investments.