You are going to invest $6,000 for the next 50 years. You expect to earn 8%...

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

Solutions

Expert Solution

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

ekkarill92 answered 1 year ago

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