Assume that the rate of inflation during all these periods was 3 percent a year. Compute the real value of the two tax-deferred portfolios in Problems 2a and 3a.

Data From Problem 2a and 3a.

2a. Someone in the 36 percent tax bracket can earn 9 percent annually on her investments in a tax-exempt IRA account. What will be the value of a one-time $10,000 investment in 5 years? 10 years? 20 years? 

3b. Suppose the preceding 10 percent return is taxable rather than tax-deferred. What will be the after-tax value of his $10,000 investment after 5, 10, and 20 years?