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Author Question: Kate can invest $4,000 of after-tax dollars (AT$) directly in a taxable bond outside an IRA, or she ... (Read 124 times)

Pea0909berry

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Kate can invest $4,000 of after-tax dollars (AT$) directly in a taxable bond outside an IRA, or she can contribute the $4,000 to a nondeductible IRA and invest in the same bond through the IRA vehicle. In either case the bond yields an annual 3% before-tax rate of return (BTROR). Kate's marginal tax rate is 15%, and she expects it to remain so for the entire investment horizon of 25 years. What is the after-tax accumulation for the "bond outside the IRA" after 25 years (assume that bond interest is reinvested at the same rate)?
◦ $5,585
◦ $7,507
◦ $8,375
◦ None of these.


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Marked as best answer by Pea0909berry on Sep 13, 2020

Edwyer

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Pea0909berry

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Reply 2 on: Sep 13, 2020
YES! Correct, THANKS for helping me on my review


Liamb2179

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Reply 3 on: Yesterday
Excellent

 

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