1. Suppose your first job pays you $28,000 annually. What percentage should your cash reserve contain? How much life insurance should you carry if you are unmarried? How much if you are married with two young children? 2. Using Exhibit 2.6, what is the marginal tax rate for a couple, filing jointly, if their taxable income is $20,000 ? $40,000 ? $60,000 ? What is their tax bill for each of these income levels? What is the average tax rate for each of these income levels? 3. What is the marginal tax rate for a single individual if her taxable income is $20,000 ? $40,000 ? 60,000 ? What is her tax bill for each of these income levels? What is her average tax rate for each of these income levels? 4. a. Someone in the 36 percent tax bracket can earn 9 percent annually on her investments in a tax-exempt IRA account. What will be the value of a one-time $10,000 investment in 5 years? 10 years? 20 years? b. Suppose the preceding 9 percent return is taxable rather than tax-deferred and the taxes are paid annually. What will be the after-tax value of her $10,000 investment after 5,10 , and 20 years? 5. a. Someone in the 15 percent tax bracket can earn 10 percent on his investments in a taxexempt IRA account. What will be the value of a $10,000 investment in 5 years? 10 years? 20 years? b. Suppose the preceding 10 percent return is taxable rather than tax-deferred. What will be the after-tax value of his $10,000 investment after 5,10 , and 20 years? 6. Assume that the rate of inflation during all these periods was 3 percent a year. Compute the real value of the two tax-deferred portfolios in problems 4a and 5a