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7. Numerical problem IV (10p) (a) You plan to make a contribution in the amount of $18,000 to a regular 401(k) account. Your employer matches
7. Numerical problem IV (10p) (a) You plan to make a contribution in the amount of $18,000 to a regular 401(k) account. Your employer matches your contribution dollar for dollar up to $6,000. What is the future value of the investment after 40 years, if the expected rate of return is 6%, your current income tax rate is 40%, your investment income tax rate is 25%, and your income tax rate at the time of withdrawal is 30%? (b) What is the future value of a Roth 401(k) account, everything else equal? 7. Numerical problem IV (10p) (a) You plan to make a contribution in the amount of $18,000 to a regular 401(k) account. Your employer matches your contribution dollar for dollar up to $6,000. What is the future value of the investment after 40 years, if the expected rate of return is 6%, your current income tax rate is 40%, your investment income tax rate is 25%, and your income tax rate at the time of withdrawal is 30%? (b) What is the future value of a Roth 401(k) account, everything else equal
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