Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Assuming a 1-year, money market account investment at 1.68 percent (APY), a 0.51% inflation rate, a 35 percent marginal tax bracket, and a constant $70,000

image text in transcribed
image text in transcribed
Assuming a 1-year, money market account investment at 1.68 percent (APY), a 0.51% inflation rate, a 35 percent marginal tax bracket, and a constant $70,000 balance, calculate the after-tax rate of return, the real return, and the total monetary return. What are the implications of this result for cash management decisions? Assuming a 1-year, money market account investment at 1.68 percent (APY), a 35 percent marginal tax bracket, and a constant $70,000 balance the after-tax rate of return is %. (Round to two decimal places.) as ng Sy Assuming a 1-year, money market account investment at 1.68 percent (APY), a 35 percent marginal tax bracket, and a constant $70,000 balance the after-tax monetary return is $ . (Round to the nearest dollar.) Given an after-tax return of 1.09% and an inflation rate of 0.51% the after-tax real return is (Round to two decimal places.) %. nm Given an after-tax return of 1.09% and an inflation rate of 0.51% the after-tax real monetary return is $ . (Round to the nearest dollar.) What is the implication of this result for cash management decisions? (Select the best answer below.) end O A. The implication is that it is difficult to do any more than keep up with taxes and inflation ess Click to select your answer(s). What is the implication of this result for cash management decisions? (Select the best answer Pleas below.) going O A. The implication is that it is difficult to do any more than keep up with taxes and inflation with liquid assets. Therefore, only the amount needed for financial emergencies and short-term goals should be placed in assets with such a low risk-return ratio. Additional funds should be invested elsewhere for a higher return. O B. The implication is that it is easy keep up with taxes and inflation with liquid assets. Therefore, not only should the amount needed for financial emergencies and short-term goals be placed in liquid cash assets but additional funds should also be invested here. OC. No implication can be drawn from this information O D. The implication is that it is difficult to do any more than keep up with taxes and inflation with money market account investments so these funds should be put in higher yielding investments like stocks and long-term bonds. Send On m Mesa Click to select your answer(s)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Sustainable Finance And Impact Investing

Authors: Alan S. Gutterman

1st Edition

1637423764, 978-1637423769

More Books

Students also viewed these Finance questions

Question

=+1. What has happened to David Bruce recently?

Answered: 1 week ago