Poll

What is your overall opinion on Barack Obama's tenure as president?
Excellent
Good
Neither good nor bad
Bad
Terrible
If you would like to vote in this poll, please login or register

Previous poll results: Do you believe in global warming?
New Topic  
wrote...
Posts: 958
Credits: 325
Rep: 1 0
A week ago
Cooper can invest $10,000 after-tax dollars in a taxable bond either outside or inside a traditional nondeductible IRA. He will hold the investment for ten years. The bond yields 6% before taxes and Cooper's marginal tax rate is 33%. If he invests directly in the bond, he will withdraw an amount of interest each year sufficient to pay taxes and leave the remaining interest in the investment. What are the after-tax accumulations in the bond and in the IRA? Cooper will not be subject to the 10% penalty tax when the IRA withdrawal occurs.
Read 7 times
1 Reply
We do not judge the people we love.

Prentice Hall's Federal Taxation by Kramer
replies
Answer verified by a moderator
wrote...
*
Posts: 1868
Credits: 9487
A week ago
To view this post and more
You'll need to login or register
The after-tax accumulation for the direct investment in the bond uses the Current Model.
10,000 [(1 + .06)(1 - 0.33)]10 = $14,802

The after-tax accumulation for the nondeductible traditional IRA uses the Deferred Model.
10,000 [(1.06) (1 - 0.33) + 0.33]10 = $15,298
New Topic      
This board requires you to register before making a post. Click here to join.

Control Panel

Post homework questions online and get free homework help from tutors.
There are currently 603 guests browsing and 33 members online. So far today, 506 students have registered.
Ask a Question Add Gallery Image Add New Term
Dictionary
Search Images
Free PubMed Mathematics Tools Arcade
Related Images
1116
5
04/14/12

346
5
08/27/13

197
0
08/12/15