1.Suppose you invest $100,000 in a C corporation for 10 years. You expect the corporation to earn 8% pa before any corporate taxes and any investor level taxes.The firm does not plan to pay any dividends over the 10 year period. You currently face a 40% tax rate on ordinary income, and 20% tax rate on capital gains.The corporation faces a tax rate of 35%.The tax rates are not expected to change.1.Instead of investing your $100,000 in the C corporation, you invest it in an S corporation.

What is your after-tax dollar accumulation at the end of the 10 year holding period?