Question
Checked Impact of Tax Test 4 Amount earned 33,460 Tax rate 15.0% Amount you want to spend 25,800 Rate of return you earn each year
Checked Impact of Tax Test 4 Amount earned 33,460 Tax rate 15.0% Amount you want to spend 25,800 Rate of return you earn each year 7.0% Plan A (Invest using after-tax dollars) (1) Figure out the amount to invest so that you can spend your desired amount. (2) Invest that amount, and let it grow for 4 years. Be sure to tax the increase at the end of each year, including the last (4th) year. (3)Please compute the amount "in your pocket" after the end of the 4th year.(Note:you can spend that amount since it is after-tax.) Plan B (Invest using pre-tax dollars) (1) Figure out the amount to invest so that you can spend your desired amount. (2) Invest that amount, and let it grow for 4 years. After the last (4th) increase, be sure to tax the full amount. (3)Please compute the amount "in your pocket" after the end of the 4th year.(Note:you can spend that amount since it is after-tax.) Please compare the "Step 3" amounts from each plan. How much more do you have from Plan B? A Between 10 and 60 B Between 60 and 90 C Between 90 and 120
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