Your sister inherited $49,000 22 years ago. She opened a taxable investment account and bought some securities. The securities did not pay any dividends and they did not pay any interest during the past 22 years. The account earned a before tax rate of return of 5.1%. Your sister has decided to sell all of the securities and close the account. Your sister's marginal tax rate on interest income is 42.9%. 

After the sale, and paying the appropriate taxes what was your sister's effective annual after-tax rate of return.

Answer rating: 100% (QA)

To calculate your sisters effective annual aftertax rate of return we need to consider the beforetax rate of return the marginal tax rate on interest ... View the full answer