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With a traditional IRA, you get to deduct the amount you contribute from your current taxable income, invest the funds free from tax, but then

With a traditional IRA, you get to deduct the amount you contribute from your current taxable income, invest the funds free from tax, but then pay taxes on the full amount you withdraw when you retire. Suppose your tax rate is 40 percent and you initially deposit $2 comma 000 in an IRA. The proceeds double in seven years to $4 comma 000. You then retire and pay taxes on the $4 comma 000 at your 40 percent rate.


Taking into account your tax deduction for the IRA, how much did your investment in the IRA really cost you? $ 1200. (Enter your response as an integer.) 


What is your return after seven years? enter your response here

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