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When you retire, you'd like to have an annual after-tax income of $40,000 at the beginning of each year for 25 years, increased annually for
When you retire, you'd like to have an annual after-tax income of $40,000 at the beginning of each year for 25 years, increased annually for an expected inflation rate of 2%. Upon retirement, how much money will you need to be able to fund your retirement assuming you can earn 7% compounded annually on those funds and your marginal tax rate is 20\%? (NOTE: round the interest rate to 2 decimal places! eg. 4.92 ) Real Rate of Return = (nominal, annual rate of return- annual inflation rate)/(1+inflation rate) After-Tax Rate of Return = nominal, annual rate of return X (1- Marginal Tax Rate) Real After-Tax Rate of Return = (after-tax rate of return - annual inflation rate) /(1+ inflation rate) 680,315,60 680,155.10 656.976.90 657,119.20
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