Tax rate is 30 percent and all annuities begin at the end of year one.

(A) If 30,000 after-tax dollars are invested at 7% in a single-premium tax-deffered annuity, how many after-tax dollars will be accumulated in 20 years?

(B) Studebaker can afford to have his annual income reduced by 3,052 after-tax dollars. How much is this before taxes? If these before-tax dollars are invested each year at 7%, how many after-tax dollars will be accumulated in 20 years?

(C) Redo part (B) assuming 8% is earned during years 1-10, 5% during years 11-15, and 7% during years 16-20.

Answer rating: 100% (QA)

a We are told that 30000 is a single one time investment Future Value Principal x 1 in where i rate ... View the full answer