BUSINESS DECISION: INVESTING YOUR TAX SAVINGS

You are a manager for Vector International. You earn $50,000 per year and are in the 28% federal income tax bracket. Each year you contribute $2,500 tax free to your individual retirement account, IRA. The account earns 8% annual interest. In addition, the amount of tax that you save each year by making these "pre-tax" contributions

BUSINESS DECISION: INVESTING YOUR TAX SAVINGS You are a manager for Vector International. You earn s50,000 per year and are in the federal income tax bracket. individual retirement account, IRA. The account earns 8% annual interest. In addition, the amount of tax that you save each invested in a taxable aggressive growth mutual fund averaging 1596. Hint: For some answers, you may wish to click here for Table 12-1 a. How much tax do you save each year by making the re n" fund contributions? 700 b. How much will the retirement fund be worth in 30 years? 81,000 c. Although the income from this investment is taxable each year, how much will he tax savings fund be worth in 30 years? 68,850 Aida Feedback Partially Correct Ask me anything