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Kaan, a 5 5 - year - old software engineer, earned a pre - tax income of $ 2 0 0 , 0 0 0
Kaan, a yearold software engineer, earned a pretax income of $ in He plans to quit his current job in years to start his own business. Kaan already holds several accounts with RBC but intends to open new TFSA, RRSP and nonregistered investment accounts with TD Bank. He will allocate funds in TD Bank for his business venture while reserving funds in RBC for emergencies and retirement. Kaan has the capacity to save $ annually in real, before tax dollars and will only deposit to TD bank accounts from now on until retirement. His savings strategy includes contributions to a TFSA, RRSP and nonregistered investment account at TD Bank.
In he will contribute to the TFSA up to the annual limit with contributions increasing annually to match the inflation rate. The RRSP contribution remains fixed at $ in real dollars due to employer contributions. Any remaining savings are directed to the nonregistered investment account. Contributions occur at yearend. Kaan is predicted to have a marginal tax rate of indefinitely. The inflation rate is and the nominal rate of return on all investments is Kaan plans to withdraw the full amount from each account after years.
Assume TFSA and RRSP contribution limit to increase every year exactly matching inflation.
No contribution rooms of TFSA and RRSP were carried over from previous years.
Be aware of the characteristics of each account you found in part a when answering parts ce of the question.b Calculate Kaan's nominal beforetax return, nominal aftertax return, real beforetax
return, and real aftertax return on investments.
Round your answer to four decimal points eg or
c How much money will he have after taxes in real dollars from TFSA held in TD bank?
d How much money will he have after taxes in real dollars from RRSP held in TD bank?
e How much money will he have after taxes in real dollars from the nonregistered investment
account held in TD bank?
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