Assume that a portfolio generates a total return of $16\%.$ The tax rates on interest, dividends, and

capital gains are $35\%,20\%,$ and $20\%,$ respectively. The proportions of the portfolio return from

interest, dividends, and realized capital gains are $10\%,25\%,$ and $35\%,$ respectively.

Question $1.$

Calculate the after taxes net return.

$[5$ marks$]$

Question $2.$

Calculate the effective capital gains tax rate.

$[5$ marks$]$

Question $3.$

Calculate the expected balance in the account in seven years after payment of all taxes assuming

the return proportions for the entire time period and the account's cost basis is $100,000.$

$[5$ marks$]$

Question $4.$

Calculate the expected balance in the account in seven years after payment of all taxes assuming

the account's cost basis is $80,000$ instead of $100,000$ and the investment's current value is

$110,000.$

$[5$ marks$]$

Question $5.$

Calculate the accrual equivalent after$-$tax return assuming the return proportions continue for eight

years and the account's cost basis is $100,000.$

$[5$ marks$]$

Question $6.$

Caclulate the accrual equivalent tax rate assuming the return proportions continue for eight years

and the account's cost basis is $100,000.$

$[5$ marks$]$

Question $7.$

Calculate the expected after$-$tax balance that can be withdrawn after $21$ years, assuming a tax rate

of $30\%$ and a pre$-$tax return of $10\%,$ assuming $110,000$ is invested in a tax$-$deferred account.

marks$]$

Question $8.$

Calculate the expected balance in the account after $21$ years, assuming a tax rate of $30\%$ and pre$-$

tax return of $10\%,$ assuming that $110,000$ is invested in a tax$-$exempt account.

$[5$ marks$]$