Ashley Travis, of Harrisburg, Illinois, is in the 25 percent marginal tax bracket and is considering the tax consequences of investing $2,000 at the end of each year for 30 years in a tax-sheltered retirement account, assuming that the investment earns 8 percent annually.
(a) How much will Ashley's account total over 30 years if the growth in the investment remains sheltered from taxes?
(b) How much will the account total if the investments are not sheltered from taxes?