Question 5: Iris wants to save money to buy a new sailboat. In 2010, Iris earns $20,000, and faces a marginal tax rate of 25 percent. In 2015, Iris will earn $50,000, and face a marginal tax rate of 40 percent. If she invests money from 2010 to 2015, she will earn interest totaling 50 percent of her initial investment. a. Explain the difference between a registered retirement savings plan (RRSP) and a tax free savings account (TFSA). b. Iris saves $4,000 of her before tax earnings in 2010. If she puts the money into an RRSP, how much can she consume in 2010? If she puts the money into a TFSA? C. How much interest will she earn in the five years from 2010 to 2015? d. In 2015, Iris withdraws the entire amount-principal plus interest - from her savings account. How much tax does she pay on the amount withdrawn from her savings account if it is an RRSP? What if the savings account is a TFSA (how much tax does she pay)? e. Which is the better investment strategy for Iris: putting money into an RRSP or a TFSA? Why? Question 5: Iris wants to save money to buy a new sailboat. In 2010, Iris earns $20,000, and faces a marginal tax rate of 25 percent. In 2015, Iris will earn $50,000, and face a marginal tax rate of 40 percent. If she invests money from 2010 to 2015, she will earn interest totaling 50 percent of her initial investment. a. Explain the difference between a registered retirement savings plan (RRSP) and a tax free savings account (TFSA). b. Iris saves $4,000 of her before tax earnings in 2010. If she puts the money into an RRSP, how much can she consume in 2010? If she puts the money into a TFSA? C. How much interest will she earn in the five years from 2010 to 2015? d. In 2015, Iris withdraws the entire amount-principal plus interest - from her savings account. How much tax does she pay on the amount withdrawn from her savings account if it is an RRSP? What if the savings account is a TFSA (how much tax does she pay)? e. Which is the better investment strategy for Iris: putting money into an RRSP or a TFSA? Why