Alan inherited $103,600 with the stipulation that he "invest it to financially benefit his family." Alan and his wife Alice decided they would invest the inheritance to help them accomplish two financial goals: purchasing a Park City vacation home and saving for their son Cooper's education. Vacation Home $ 51,800 Cooper's Education $51,800 Initial investment Investment horizon 5 years 18 years Alan and Alice have a marginal income tax rate of 32 percent (capital gains rate of 15 percent) and have decided to investigate the following investment opportunities. Complete the two annual after-tax rate of return columns for each investment. (Do not round intermediate calculations. Round your final answers to 2 decimal places.) Annual After- Tax Rate of Return Annual After- Tax Rate of Return 5 Years 18 Years Corporate bonds (ordinary interest taxed annually) 5.75 % % 4.75 % % Dividend-paying stock (no appreciation and dividends are taxed at 15%) 3.50 % 3.50 % % Future value Growth stock Future value % is $230,000 % is $74,000 Municipal bond (tax-exempt) 3.20 % 3.10 % Helen holds 2,400 shares of Fizbo Inc. stock that she purchased 11 months ago. The stock has done very well and has appreciated $22/share since Helen bought the stock. When sold, the stock will be taxed at capital gains rates (the long-term rate is 15 percent and the short-term rate is the taxpayer's marginal tax rate). Ignore the time value of money. a. If Helen's marginal tax rate is 35 percent, how much would she save by holding the stock an additional month before selling? Tax savings Anne's marginal income tax rate is 32 percent. She purchases a corporate bond for $18,000 and the maturity, or face value, of the bond is $18,000. If the bond pays 8.2 percent per year before taxes, what is Anne's annual after-tax rate of return from the bond if the bond matures in one year? What is her annual after-tax rate of return if the bond matures in 10 years? (Round your answers to 1 decimal place.) After-Tax Rate Bond matures in one year Bond matures in 10 years Komiko Tanaka invests $12,500 in LymaBean, Inc. LymaBean does not pay any dividends. Komiko projects that her investment will generate a 10 percent before-tax rate of return. She plans to invest for the long term. a. How much cash will Komiko retain, after-taxes, if she holds the investment for 5 years and then she sells it when the long-term capital gains rate is 15 percent? (Do not round intermediate calculations. Round your final answer to the nearest whole dollar amount.) Cash retained b. What is Komiko's after-tax rate of return on her investment in part (a)? (Do not round intermediate calculations. Round your percentage answer to 2 decimal places.) After-tax rate of return