When Leslie retired at age 65, her sheltered savings provided her with a before-tax income of $42,000 p.a. This was based on the assumption she would live to age 95 and would leave no estate. Her RRSP investments were earning 5%. She died at age 85 and her nephew, the Robin, inherited the balance of her RRSP. How much did he receive from the RRSP after tax if her marginal tax rate is 37% and his marginal tax rate is 45%?

Answer rating: 100% (QA)

RateReturn on investment5 Nper Number of years of investment planned30 Nper Annual before tax income42000 PVAmount of Sheltered Savings645643 Using excel PV function Balance amount available at age 85 RateReturn on investment5 NperNumber of years of income20 NperAnnual before tax income42000 PV1Present Value of annual income523413 Using excel PV function PVPV1Present Value of savings available at age 65122230 Remaining Savings at age of 8532431312223010520 AAmount of before tax inheritence324313 BA37Taxes If marginal tax rate is 37119996 CA45Taxes If marginal tax rate is 45145941 ABAfter tax amount to be receivedTax Rate37204317 ACAfter tax amount to be receivedTax Rate45178372 H7 123456 6 7 8 9 H14 1 2 WN 3 4 5 6 7 8 9 10 11 12 13 14 A A 1 B 1 B x fx PVH4 H5H6 D fx D E F Rate Nper Nper PV PV H11 H12H13 E F Rate Nper Nper PV Return on investment Number of years of investment planned Annual before tax income ... View the full answer