Kenneth was considering whether to place $10,000 in a tax-deferred annuity or a tax-free municipal bond. Assume

Question:

Kenneth was considering whether to place $10,000 in a tax-deferred or a tax-free municipal bond. Assume the municipal bond returned 5 percent a year and the tax-deferred 6 percent. Calculate approximately how long he would have to hold the so that, if he withdrew the money and paid taxes on it, he would come out ahead. His marginal tax rate is 35 percent?
Annuity
An annuity is a series of equal payment made at equal intervals during a period of time. In other words annuity is a contract between insurer and insurance company in which insurer make a lump-sum payment or a series of payment and, in return,...