A $5.800 balance in a tax-deferred savings plan will grow to $34,054.70 in 23 ye
ID: 2784647 • Letter: A
Question
A $5.800 balance in a tax-deferred savings plan will grow to $34,054.70 in 23 years at an 8% per year interest rate, what would be the future worth if the $5,800 had been subject to a 29% income tax rate? Click the icon to view the interest and annuity table for discrete The future worth would be (Round to the nearest dollar.) Compound Amount Factor To Find F Given A Compound Present Worth Factor To Find P Given F Present Worth Factor To Find P Given A Sinking Fund Recovery Factor To Find F Given P Factor To Find A Given F To Find A Given 0.9259 0.8573 0.7938 0.7350 1.0800 0.5608 0.3880 0.3019 0.2505 0.2163 0.9259 1.7833 2.0800 3.2464 4.5061 0.4808 1.2597 0.2219 3.3121 3.9927 4.6229 5.2064 5.7466 6.2469 1.4693 0.6302 0.1363 0.5403 0.5002 0.4632 0.4289 8.9228 10.6366 12.4876 14.4866 16.6455 18.9771 1.8509 0.0801 0.0690 0.0601 0.0527 0.0465 0.0413 0.0368 0.0330 0.0296 0.0267 0.0241 0.0219 0.1601 0.1490 2.1589 2.3316 2.5182 7.5361 7.9038 8.2442 8.5595 0.1327 0.1265 0.3677 0.3405 2.9372 3.1722 27.1521 30.3243 33.7502 37.4502 15 0.1168 0.2919 0.2703 0.2502 3.7000 9.6036 0.1041 20 0.2145 0.1987 0.1839 0.1703 45.7620 50.4229 55.4568 60.8933 66.7648 10.0168 10.2007 10.3711 10.5288 10.6748 11.2578 11.6546 5.0338 0.0998 0.0980 0.0950 0.0937 0.0888 0.0858 0.0839 0.0826 0.0817 0.0150 25 30 35 6.8485 10.0627 14.7853 0.0994 113.2832 172.3168 259.058511.9246 386.5056 573.7702 12.2335 0.0088 0.0058 0.0039 0.0026 0.0313 0.0213 31.9204 Enter your answer in the answer box and then click Check Ans 50Explanation / Answer
Tax deferred: return=8% Future value=5800*(1+8%)^23..from the table we see that for the row n=23, to find f given f/p, the value is 5.8715..So, future value=5.8715*5800=34054.7
Similarly: for Taxable: returns=8%*(1-28%)=5.76%
Future value=5800*(1+5.76%)^23..So, this will equal (1.0576/1.08)^23=0.617514 times the tax deferred value..So, future value=0.617514*34054.7=21029.25
alternatively, from the table we have to see for MARR=5.76%, for the row n=23, to find f given f/p, the value is 3.62569..So, future value=3.62569*5800=21029.25
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