Kenneth was considering whether to place $10,000 in a tax deferred annuity or a tax free municipal bond Assume the municipal bond returned 5 percent a year and the tax deferred annuity 6 percent Calculate approximately how long he would have to hold the annuity so that, if he withdrew the money and paid taxes on it, he would come out ahead His marginal tax rate is 35 percent

Question: Kenneth was considering whether to place $10,000 in a tax-deferred annuity or a tax-free municipal bond. Assume the municipal bond returned 5 percent a year

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?

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