You are owed $5,000 in compensation by your employer. Your ordinary income tax rate is always 25%
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Question:
If you take current compensation, invest it for 40 years and then withdraw all of what has accumulated, how much will you have after paying all necessary taxes?
If you invest in an ordinary 401k plan, leave it untouched for 40 years and then withdraw all of what has accumulated how much will you have after paying all necessary taxes? Assume your ordinary income tax rate in 40 years is 25%.
Given b. what will be your annualized rate of return over the 40 years?
Given the data in b. except that your ordinary income tax rate in 40 years is 15% and capital gains tax rate is 5%, how much will you have in dollars after paying all necessary taxes?
$5,000 * (1+.08) ^40 * (1-.15)
Given d. what will be your annualized rate of return over the 40 years?
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
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