SI Homework: Chapter 7 Cc Homework core: 0 of 11 pts 6 of 9 (6 complete) HW Score: 60.5%, 60.5 of 100 Problem 7-51 (algorithmic) Question Help When you are young, invest in a Roth IRA. Instead of getting a tax break when you put money asido as in most 401(k) plans, savers in Roth IRAs get totally tax free withdrawals when they retire. You should use your time (0.9. 40 years) to build tas-free retirement funds. To illustrate the possible benefit of a Roth savings plan, suppose you are 40 years old and you invest $5,600 per year (before taves of 22%) for 40 years. This means you will be investing $4.368 per year after taxes are deducted. If your personal interest rate is 12% per year, you will have this amount in 40 years: $4,368 (FIA, 12%, 40) - $3,350,655 when you retire. Compare this with a traditional IRA which allows you to invest $5,000 per year tax free. You will withdraw all the accumulated funds in 40 years, as a lump-sum, and pay 34% income tax on your withdrawal. Which is the better plan? Click the icon to view the interest and annuity table for discrete compounding when the MARR is 12% per year, The future worth of savings under the traditional IRA plan after paying the 34% tax wil be $(Round to the nearest dollar) N 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Discrete Compounding; 1= 12% Single Payment Uniform Series Compound Compound Sinking Amount Present Amount Present Fund Factor Worth Factor Factor Worth Factor Factor To Find F To Find P To Find F To Find P To Find A Given P Given F Given A Given A Given F FP PIF FIA PIA AIF 1.1200 0.8929 1.0000 0.8929 1.0000 1.2544 0.7972 2.1200 1.6901 0.4717 1.4049 0.7118 3.3744 2.4018 0.2963 1.5735 0.6355 4.7793 3.0373 0.2092 1.7623 0.5674 6.3528 3.6048 0.1574 1.9738 0.5066 8.1152 4.1114 0.1232 2.2107 0.4523 10.0890 4.5638 0.0991 2.4760 0.4039 12.2997 4.9676 0.0813 2.7731 0.3606 14.7757 5.3282 0.0677 3.1058 0.3220 17.5487 5.6502 0.0570 3.4785 0.2875 20.6546 5.9377 0.0484 3.8960 0.2567 24.1331 6.1944 0.0414 4.3635 0.2292 28.0291 6.4235 0.0357 4.8871 0.2046 32.3926 6.6282 0.0309 5.4736 0.1827 37.2797 6.8109 0.0268 6.1304 0.1631 42.7533 6.9740 0.0234 6.8660 0.1456 48.8837 7.1196 0.0205 7.6900 0.1300 55.7497 7.2497 0.0179 8.6128 0.1161 63.4397 7.3658 0.0158 9.6463 0.1037 72.0524 7.4694 0.0139 10.8038 0.0926 81.6987 7.5620 0.0122 12.1003 0.0826 92.5026 7.6446 0.0108 13.5523 0.0738 104.6029 7.7184 0.0096 15.1786 0.0659 118.1552 7.7843 0.0085 17.0001 0.0588 133.3339 7.8431 0.0075 29.9599 0.0334 241.3327 8.0552 0.0041 52.7996 0.0189 431.6635 8.1755 0.0023 93.0510 0.0107 767.0914 8.2438 0.0013 163.9876 0.0061 1358.2300 8.2825 0.0007 289.0022 0.0035 2400.0182 8.3045 0.0004 Capital Recovery Factor To Find A Given P AIP 1.1200 0.5917 0.4163 0.3292 02774 0.2432 0.2191 0.2013 0.1877 0.1770 0.1684 0.1614 0.1557 0.1509 0.1468 0.1434 0.1405 0.1379 0.1358 0.1339 0.1322 0.1308 0.1296 0.1285 0.1275 0.1241 0.1223 0.1213 0.1207 0.1204 23 24 25 30 35 40 45 50
