4. (12 Marks) a) (3 Marks) An investment of $1,0000 earns annual interest of 5% (no capital gains). Assuming accrual taxes of 30%, how much is the expected after-tax value of the investment in ten years? How much is the tax drag in percentage? b) (3 Marks) Consider the following statements about an account subject to accrual taxes: Statement 1: As the investment horizon increases the tax drag increases. Statement 2: As the investment return increases the tax drag decreases. Which statement is correct? c) (3 Marks) An investment of \$1,000 earns an annual return of 9\%, all of which is deferred capital gains. At a capital gains tax rate of 20%, determine which of the following is closest to the after-tax value of the investment in 10 years. How much is the tax drag in percentage terms? d) (3 Marks) What is the major difference of wealth-based taxes from accrual taxes and capital gains taxes