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BUSINESS DECISION: INVESTING YOUR TAX SAVINGS You are a manager for Vector International. You cam $50,000 per year and are in the 28% federal income tax bracket. Each year you contribute $2,500 tax free to your individual retirement account. IRA. The account cams 8 % annual interest. In addition, the amount of tax that you save each year by making these "pre-tax” contributions is invested in a taxable aggressive growth mutual fund averaging 15% . a. How much tax do you save each year by making the retirement fund contributions? b. How much will the retirement fund be worth in 30 years? c. Although the income from this investment is taxable each year, how much will the “tax savings” fund be worth in 30 years?

BuyFind

Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
Publisher: Cengage Learning
ISBN: 9781305585447
BuyFind

Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
Publisher: Cengage Learning
ISBN: 9781305585447

Solutions

Chapter
Section
Chapter 18.III, Problem 30RE
Textbook Problem

BUSINESS DECISION: INVESTING YOUR TAX SAVINGS

You are a manager for Vector International. You cam $50,000 per year and are in the 28% federal income tax bracket. Each year you contribute $2,500 tax free to your individual retirement account. IRA. The account cams 8 % annual interest. In addition, the amount of tax that you save each year by making these "pre-tax” contributions is invested in a taxable aggressive growth mutual fund averaging 15% .

a. How much tax do you save each year by making the retirement fund contributions?

b. How much will the retirement fund be worth in 30 years?

c. Although the income from this investment is taxable each year, how much will the “tax savings” fund be worth in 30 years?

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Chapter 18 Solutions

Contemporary Mathematics for Business & Consumers
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Ch. 18.I - Calculate the missing information for the...Ch. 18.I - Calculate the missing information for the...Ch. 18.I - Calculate the missing information for the...Ch. 18.I - Calculate the missing information for the...Ch. 18.I - Calculate the missing information for the...Ch. 18.I - Calculate the missing information for the...Ch. 18.I - Calculate the missing information for the...Ch. 18.I - 14. Gloria Carey purchased a refrigerator at Best...Ch. 18.I - 15. Sig Moline purchased supplies at Office Max...Ch. 18.I - Last month The Sweet Tooth Candy Shops had total...Ch. 18.I - Abby Duncan purchased a diamond necklace for...Ch. 18.I - 18. 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