She plans to invest 1,000 every year for 40 years. She has found an investment account that earns 5% per year. She is in a 20% income tax bracket. Interest Factors - Future Value of an Annuity Years 2% 3% 4% 5% 10 10.9497 11.4639 12.0061 12.5779 11 12.1687 12.8078 13.4864 14.2068 12 13.4121 15.0258 14.1920 15.6178 15.9171 17.7130 13 14.6803 16.6268 14 15.9739 17.0863 18.2919 19.5986 15 17.2934 18.5989 20.0236 21.5786 16 18.6393 20.1569 21.8245 23.6575 17 20.0121 21.7616 23.6975 25.8404 18 21.4123 23.4144 25.6454 28.1324 19 22.8406 25.1169 27.6712 30.5390 20 24.2974 26.8704 29.7781 33.0660 21 25.7833 28.6765 31.9692 35.7193 22 27.2990 30.5368 34.2480 38.5052 23 28.8450 32.4529 36.6179 41.4305 22 27.2990 30.5368 34.2480 38.5052 23 28.8450 32.4529 36.6179 41.4305 24 30.4219 34.4265 39.0826 44.5020 25 32.0303 36.4593 41.6459 47.7271 26 33.6709 38.5530 44.3177 51.1135 27 35.3443 40.7096 47.0842 54.6691 28 37.0512 42.9309 49.9676 58.4026 29 38.7922 45.2188 52.9663 62.3227 30 40.5681 47.5754 56.0849 66.4389 40 60.4020 75.4013 95.0255 120.7998 After-Tax Nonsheltered $1,000 40 Rebecca's Options After-Tax Sheltered $1,000 Pretax Sheltered $1,000 40 40 5 5 5 Annual investment Number of years to invest Interest offered by account (as a %) Effective interest for Rebecca (as a %) Interest factor from table Accumulated over 40 years Invested over 40 years Income tax bracket (as a %) Income tax saved per year S S 20 20 20 Income tax saved over 40 years She plans to invest 1,000 every year for 40 years. She has found an investment account that earns 5% per year. She is in a 20% income tax bracket. Interest Factors - Future Value of an Annuity Years 2% 3% 4% 5% 10 10.9497 11.4639 12.0061 12.5779 11 12.1687 12.8078 13.4864 14.2068 12 13.4121 15.0258 14.1920 15.6178 15.9171 17.7130 13 14.6803 16.6268 14 15.9739 17.0863 18.2919 19.5986 15 17.2934 18.5989 20.0236 21.5786 16 18.6393 20.1569 21.8245 23.6575 17 20.0121 21.7616 23.6975 25.8404 18 21.4123 23.4144 25.6454 28.1324 19 22.8406 25.1169 27.6712 30.5390 20 24.2974 26.8704 29.7781 33.0660 21 25.7833 28.6765 31.9692 35.7193 22 27.2990 30.5368 34.2480 38.5052 23 28.8450 32.4529 36.6179 41.4305 22 27.2990 30.5368 34.2480 38.5052 23 28.8450 32.4529 36.6179 41.4305 24 30.4219 34.4265 39.0826 44.5020 25 32.0303 36.4593 41.6459 47.7271 26 33.6709 38.5530 44.3177 51.1135 27 35.3443 40.7096 47.0842 54.6691 28 37.0512 42.9309 49.9676 58.4026 29 38.7922 45.2188 52.9663 62.3227 30 40.5681 47.5754 56.0849 66.4389 40 60.4020 75.4013 95.0255 120.7998 After-Tax Nonsheltered $1,000 40 Rebecca's Options After-Tax Sheltered $1,000 Pretax Sheltered $1,000 40 40 5 5 5 Annual investment Number of years to invest Interest offered by account (as a %) Effective interest for Rebecca (as a %) Interest factor from table Accumulated over 40 years Invested over 40 years Income tax bracket (as a %) Income tax saved per year S S 20 20 20 Income tax saved over 40 years