Author Question: If t0is the tax rate in Year 0, tnis the tax rate in Year n, and ATA is after-tax accumulation, then ... (Read 115 times)

lracut11 · **on:** Sep 13, 2020

Question 1

If "R" equals the before-tax rate of return and "t" equals the investor's marginal tax rate, then the after-tax rate of return represented by "r" can be expressed as
◦ r = R(1 - t).
◦ r = R(1 + t).
◦ r = (1 + t)^R.
◦ r = R - t.

Question 2

If t₀ is the tax rate in Year 0, t_n is the tax rate in Year n, and ATA is after-tax accumulation, then which one of the following does not hold true?
◦ if t₀ = t_n, ATA per Exempt Model = ATA per Pension Model
◦ if t₀ > t_n, ATA per Exempt Model < ATA per Pension Model
◦ if t₀ < t_n, ATA per Exempt Model > ATA per Pension Model
◦ if t₀ > t_n, ATA per Exempt Model > ATA per Pension Model

matt · **Reply #1 on:** Sep 13, 2020

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