Whether the type of account Person E opens will have an effect on this amount.

Question

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Answer 1

Question

Chapter 14, Problem 8FPE

a)

Summary Introduction

To calculate: Whether the type of account Person E opens will have an effect on this amount.

b)

Summary Introduction

To determine: The annual and tax savings from the contribution and show the difference of calculation among traditional IRA and Roth IRA.

c)

Summary Introduction

To determine: The amount Person E will have in traditional IRA compared with Roth IRA when the tax rate is 40%.

c)

Summary Introduction

To determine: The kind of Roth recommendable to Person E and whether a maximum contribution increased to $7,000 makes any differences.

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Elijah James is in his early 30s and is thinking about opening an IRA. He can't decide whether to open a traditional/deductible IRA or a Roth IRA, so he turns to you for help. To support your explanation, you decide to run some comparative numbers on the two types of accounts; for starters, use a 30-year period to show Elijah what contributions of $5,000 per year will amount to (after 30 years) if he can earn, say, 12 percent on his money. Round your answers to the nearest dollar. 1A. traditional IRA $___1B. Roth IRA $ _____ Will the type of account he opens have any impact on this amount?-Select: YES OR NO Assuming that Elijah is in the 25 percent tax bracket (and will remain there for the next 30 years), determine the annual and total (over 30 years) tax savings he'll enjoy from the $5,000-a-year contributions to his IRA. Contrast the (annual and total) tax savings he'd generate from a traditional IRA with those from a Roth IRA. If an answer is zero, enter "0". Round your answers…

Elijah James is in his early 30s and is thinking about opening an IRA. He can't decide whether to open a traditional/deductible IRA or a Roth IRA, so he turns to you for help. To support your explanation, you decide to run some comparative numbers on the two types of accounts; for starters, use a 35-year period to show Elijah what contributions of $5,000 per year will amount to (after 35 years) if he can earn, say, 8 percent on his money. Round your answers to the nearest dollar. 1A. traditional IRA $______1B. Roth IRA $_______ Will the type of account he opens have any impact on this amount? Select: Yes or No 2. Assuming that Elijah is in the 25 percent tax bracket (and will remain there for the next 35 years), determine the annual and total (over 35 years) tax savings he'll enjoy from the $5,000-a-year contributions to his IRA. Contrast the (annual and total) tax savings he'd generate from a traditional IRA with those from a Roth IRA. If an answer is zero, enter "0". Round your…

Deciding between traditional and Roth IRAs. Elijah James is in his early 30s and is thinking about opening an IRA. He can’t decide whether to open a traditional/deductible IRA or a Roth IRA, so he turns to you for help. To support your explanation, you decide to run some comparative numbers on the two types of accounts; for starters, use a 25-year period to show Elijah what contributions of $5,500 per year will amount to (after 25 years) if he can earn, say, 10 percent on his money. Will the type of account he opens have any impact on this amount? Explain. Assuming that Elijah is in the 22 percent tax bracket (and will remain there for the next 25 years), determine the annual and total (over 25 years) tax savings he’ll enjoy from the $5,500-a-year contributions to his IRA. Contrast the (annual and total) tax savings he’d generate from a traditional IRA with those from a Roth IRA. Now, fast-forward 25 years. Given the size of Elijah’s account in 25 years (as computed in part a),…

Answer 2

Question

Chapter 14, Problem 8FPE

a)

Summary Introduction

To calculate: Whether the type of account Person E opens will have an effect on this amount.

b)

Summary Introduction

To determine: The annual and tax savings from the contribution and show the difference of calculation among traditional IRA and Roth IRA.

c)

Summary Introduction

To determine: The amount Person E will have in traditional IRA compared with Roth IRA when the tax rate is 40%.

c)

Summary Introduction

To determine: The kind of Roth recommendable to Person E and whether a maximum contribution increased to $7,000 makes any differences.

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Answer 3

Question

Chapter 14, Problem 8FPE

a)

Summary Introduction

To calculate: Whether the type of account Person E opens will have an effect on this amount.

b)

Summary Introduction

To determine: The annual and tax savings from the contribution and show the difference of calculation among traditional IRA and Roth IRA.

c)

Summary Introduction

To determine: The amount Person E will have in traditional IRA compared with Roth IRA when the tax rate is 40%.

c)

Summary Introduction

To determine: The kind of Roth recommendable to Person E and whether a maximum contribution increased to $7,000 makes any differences.

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Answer 4

Question

Chapter 14, Problem 8FPE

a)

Summary Introduction

To calculate: Whether the type of account Person E opens will have an effect on this amount.

b)

Summary Introduction

To determine: The annual and tax savings from the contribution and show the difference of calculation among traditional IRA and Roth IRA.

c)

Summary Introduction

To determine: The amount Person E will have in traditional IRA compared with Roth IRA when the tax rate is 40%.

c)

Summary Introduction

To determine: The kind of Roth recommendable to Person E and whether a maximum contribution increased to $7,000 makes any differences.

Expert Solution & Answer

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Answer 5

Chapter 14, Problem 8FPE

a)

Summary Introduction

To calculate: Whether the type of account Person E opens will have an effect on this amount.

b)

Summary Introduction

To determine: The annual and tax savings from the contribution and show the difference of calculation among traditional IRA and Roth IRA.

c)

Summary Introduction

To determine: The amount Person E will have in traditional IRA compared with Roth IRA when the tax rate is 40%.

c)

Summary Introduction

To determine: The kind of Roth recommendable to Person E and whether a maximum contribution increased to $7,000 makes any differences.

Answer 6

Chapter 14, Problem 8FPE

a)

Summary Introduction

To calculate: Whether the type of account Person E opens will have an effect on this amount.

Answer 7

Chapter 14, Problem 8FPE

a)

Summary Introduction

To calculate: Whether the type of account Person E opens will have an effect on this amount.

Answer 8

b)

Summary Introduction

To determine: The annual and tax savings from the contribution and show the difference of calculation among traditional IRA and Roth IRA.

Answer 9

b)

Summary Introduction

To determine: The annual and tax savings from the contribution and show the difference of calculation among traditional IRA and Roth IRA.

Answer 10

c)

Summary Introduction

To determine: The amount Person E will have in traditional IRA compared with Roth IRA when the tax rate is 40%.

Answer 11

c)

Summary Introduction

To determine: The amount Person E will have in traditional IRA compared with Roth IRA when the tax rate is 40%.

Answer 12

c)

Summary Introduction

To determine: The kind of Roth recommendable to Person E and whether a maximum contribution increased to $7,000 makes any differences.

Answer 13

c)

Summary Introduction

To determine: The kind of Roth recommendable to Person E and whether a maximum contribution increased to $7,000 makes any differences.

Answer 14

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Answer 15

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Answer 16

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Answer 17

Ch. 14 - Prob. 1LO Ch. 14 - Prob. 2LO Ch. 14 - Prob. 3LO Ch. 14 - Prob. 4LO Ch. 14 - Prob. 5LO Ch. 14 - Prob. 6LO Ch. 14 - Prob. 1FPE Ch. 14 - Prob. 2FPE Ch. 14 - Prob. 3FPE Ch. 14 - Prob. 4FPE

Whether the type of account Person E opens will have an effect on this amount.

Solution Summary: The author compares the tax rates of traditional and Roth IRAs, and explains the difference between the two.

Concept explainers

To calculate: Whether the type of account Person E opens will have an effect on this amount.

To determine: The annual and tax savings from the contribution and show the difference of calculation among traditional IRA and Roth IRA.

To determine: The amount Person E will have in traditional IRA compared with Roth IRA when the tax rate is 40%.

To determine: The kind of Roth recommendable to Person E and whether a maximum contribution increased to $7,000 makes any differences.

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Chapter 14 Solutions