APPLIED EXAMPLE 6 Investment Analysis Both Clark and Colby are salaried individuals, 45 years of age, who are saving for their retirement 20 years from now. Both Clark and Colby are also in the 28% marginal tax bracket. Clark makes a $1000 contribution annually on December 31 into a savings account earning an effective rate of 8% per year. At the same time, Colby makes a $1000 annual payment to an insurance company for an after-tax-deferred annuity. The annuity also earns interest at an effective rate of 8% per year. (Assume that both men remain in the same tax bracket throughout this period, and disregard state income taxes.) a. Calculate how much each man will have in his investment account at the end of 20 years. b. Compute the interest earned on each account. c. Show that even if the interest on Colby's investment were subjected to a tax of 28% upon withdrawal of his investment at the end of 20 years, the net accumulated amount of his investment would still be greater than that of Clark's