In: Accounting
You are going to invest $6,000 for the next 50 years. You expect to earn 8% per year on your investment. You expect that the current tax law and tax rates of 15% on long-term capital gains and 24% on short-term capital gains and income will still be in effect in 50 years. If you take all of your money out in 50 years, how much after-tax money will you have if you invest in
a) Regular IRA
b) Roth IRA
c) A 401(k) plan with a 50% match
a) Please look at the highlight figure in chart for annuity factor
For 8% for 50 years = 12.233
Expected amount on 6000 $ after 50 Year = 12.233 x 6000
= 73398 $
Profit = Expected amoun received - Amount Invested
Profit = 73398 - 6000
Profit = 67398
Gain = 67398 -( 67398 x 0.15)
Gain = 67398-10110
Gain = 57288