A woman is in the 25% marginal tax bracket, and is considering the tax consequences of investing $2000 at the end of the year for 30 years in a tax-sheltered retirement account, assuming that the investment earns 8% annually.

A) How much will her account total over 30 years if the growth in the investment remains sheltered from taxes? Use Appendix A-3

B) How much will the account total if the investments are not sheltered from taxes? Use Appendix A-3

Appendix A-3 3% 4% 6% 7% 8% n 1 2 1.0000 1.0000 1.0000 N 1% 1.0000 2.0100 3.0301 4.0604 1.0000 2.0300 3.0909 2% 1.0000 2.0200 3.0604 4.1216 5.2040 2.0700 5% 1.0000 2.0500 3.1525 4.3101 2.0800 10000 2.0400 3.1216 4.2465 2.0600 3.1836 3 3.2149 3.2464 4 4.1836 43746 4.4399 4.5061 5 5.1010 5.3091 5.4163 5.6371 5.7507 5.8666 5.5256 6.8019 6 6.1520 6.3081 6.4684 6.6330 6.9753 7.1533 7.3359 7 7.4343 7.6625 7.8983 8.1420 8.3938 8.6540 8.9228 7 8 7.2135 8.2857 8 8.5830 8.8923 9.2142 9.5491 9.8975 10.2598 10.6366 9 9.3685 9.7546 10.5828 11.0266 11.4913 11.9780 12.4876 10.1591 11.4639 10 10.4622 10.9497 12.0061 12.5779 13.1808 13.8164 14.4866 11 11.5668 12.1687 12.8078 15.7836 16.6455 13.4864 15.0258 14.2068 15.9171 14.9716 16.8699 12.6825 13.4121 14.1920 17.8885 18.9771 12 13 13.8093 14.6803 15.6178 16.6268 17.7130 18.8821 20.1406 21.4953 14 14.9474 15.9739 17.0863 18.2919 19.5986 21.0151 22.5505 24.2149 16.0969 17.2934 18.5989 20.0236 21.5786 23.2760 25.1290 15 16 27.1521 30.3243 17.2579 18.6393 20.1569 21.8245 23.6575 25.6725 27.8881 23.6975 25.8404 33.7502 17 18 18.4304 20.0121 19.6147 21.4123 21.7616 23.4144 28.2129 30.9057 30.8402 33.9990 25.6454 28.1324 37.4502 19 25.1169 27.6712 33.7600 37.3790 41.4463 20.8109 22.8406 22.0190 24.2974 30.5390 33.0660 20 26.8704 29.7781 36.7856 40.9955 45.7620 21 28.6765 31.9692 35.7193 39.9927 44.8652 23.2392 25.7833 24.4716 27.2990 50.4229 55.4568 22 30.5368 34.2480 38.5052 43.3923 49.0057 23 32.4529 36.6179 46.9958 60.8933 25.7163 28.8450 26.9735 30.4219 41.4305 44.5020 53.4361 58.1767 24 34.4265 39.0826 50.8156 66.7648 36.4593 41.6459 63.2490 73.1059 25 26 47.7271 51.1135 54.8645 59.1564 38.5530 44.3117 68.6765 79.9544 28.2432 32.0303 29.5256 33.6709 30.8209 353443 32.1291 37.0512 27 47.0842 54.6691 63.7058 74 4838 40.7096 42.9309 87.3508 95.3388 28 49.9676 58.4026 68.5281 80.6977 29 33.4504 38.7922 45.2188 52.9663 62.3227 73.6398 873465 103.9659 30 34.7849 40.5681 47.5754 56.0849 66.4389 79.0582 94.4608 113.2832