Question
Use the following information for the last three problems. You have $10,000 of income that you want to invest for 40 years. At the end
Use the following information for the last three problems. You have $10,000 of income that you want to invest for 40 years. At the end of the 40 year period, you are going to withdraw all of the money (assume that you will not have to pay any withdrawal penalty). You estimate that your current marginal tax rate on income of 30% and your marginal tax rate on capital gains of 20% is going to remain constant for each of the next 40 years. What will your portfolio be worth if you,
2.8 Invest in a tax-deferred account (and thus owe no immediate taxes on the $10,000) that is estimated to return 9% per year.
2.9 Invest in a taxable account (and thus must immediately pay taxes on the $10,000) that is estimated to return 9% per year (assume that all gains are realized)
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