Question

Matt recently deposited $24,500 in a savings account paying a guaranteed interest rate of 3 percent for the next 10 years.

**Required:**

- If Matt expects his marginal tax rate to be 22.00 percent for the next 10 years, how much interest will he earn after-tax interest for the first year of his investment?
- How much interest will he earn after-tax interest for the second year of his investment if he withdraws enough cash every year to pay the tax on the interest he earns?
- How much will he have in the account after 4 years?
- How much will he have in the account after 7 years?

Answer #1

1. After tax interest for 1st year = 24,500 *3% *(1-0.22) => 573.3

2. After tax interest for second year if tax amount has been withdrawn.

Principal after tax = 24500 + 573.3 => 25,072.3

After tax interest for 2nd year = 25,072.3 *3% *(1-0.22) => 586.72

3. Amount in account after 4 years, due to absence of information it is assumed that tax is not paid from the amount of interest earned annually.

24,500 * (1.03)^4 => 27,575 before tax.

4. Amount in account after 7 years, due to absence of information it is assumed that tax is not paid from the amount of interest earned annually.

24,500 * (1.03)^7 => 30,132 before tax.

Please Upvote and Support!!

Matt recently deposited $26,000 in a savings account paying a
guaranteed interest rate of 6 percent for the next 10 years. (Do
not round intermediate calculations. Round your answers to the
nearest whole dollar amount.) Required: If Matt expects his
marginal tax rate to be 30.00 percent for the next 10 years, how
much interest will he earn after-tax for the first year of his
investment? How much will he have in the account after four years?
How much will...

Heather deposited $1,700 at her local credit union in a savings
account at the rate of 9.8% paid as simple interest. She will earn
interest once a year for the next 13 years. If she were to make no
additional deposits or withdrawals, how much money would the credit
union owe Heather in 13 years?
$3,865.80
$1,882.93
$266.60
$5,731.65
Now, assume that Heather’s credit union pays a compound interest
rate of 9.8% compounded annually. All other things being equal, how...

On January 1, 2016, you deposited $5,100 in a savings account.
The account will earn 11 percent annual compound interest, which
will be added to the fund balance at the end of each year.
Required: 1. What will be the balance in the savings account at the
end of 7 years? 2. What is the total interest for the 7 years? 3.
How much interest revenue did the fund earn in 2016 and in
2017?

Greg deposited $700 in his new savings account with the annual
interest rate of 8% on April 1, 2019
(A) The interest for this savings account is compounded once
every two months. Find the balance on this account on October 1,
2023 rounded to the nearest cent.
(B) With the assumptions in (A), how many years does it take for
the initial investment to triple? round to one decimal place

Suppose a savings account earns 3% interest compounded monthly.
After the first month $100.00 is deposited into the account. Each
subsequent month the deposit increases by 1%. Thus, in month 2,
$101.00 is deposited, and in month 3, $102.01 is deposited. Find
the account balance after 2 years if initially there is $400 in the
account.

$10,000 is deposited into a savings account that earns 3% per
annum compounded quarterly.
(a) How much interest will be credited in the second month?
(b) How much interest will be credited in the second year?

Your mother deposited $50,000 into a savings account for your
retirement. the account will compound interest at 5% annually. you
will not be able to withdraw any money from the account until you
retire in 40 years. Which of the following is correct?
A. The interest you earn 6 years from now will equal the
interest you earn 10 years from now.
B. The present value of this investment is equal to $50,000.
C. The interest amount you earn will...

3. Matt invested $5,500 into an account earning 2.5% APR
compounded continuously. What will his balance be after seven
years?
4. How much money should be deposited in an account today that
earns 3.5% compounded monthly so that it will accumulate to $10,000
in 8 years?

XYZ just deposited $3,500 in an account that will earn 6.2
percent per year in compound interest for 8 years. If Jelena
deposits $4,000 in an account in 2 years that earns simple
interest, then how much simple interest per year must Jelena earn
to have the same amount of money in 8 years from today as XYZ will
have in 8 years from today?

Suppose you deposited $5000 on January 1, 2014, in a savings
account paying 5% annual interest, with interest credited to the
account on December 31 of each year. On January 1, 2016, the annual
interest rate changes to 4.25%. What wil be the balance in your
account on January 1, 2030?

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 15 minutes ago

asked 23 minutes ago

asked 26 minutes ago

asked 27 minutes ago

asked 33 minutes ago

asked 42 minutes ago

asked 47 minutes ago

asked 47 minutes ago

asked 50 minutes ago

asked 1 hour ago

asked 2 hours ago

asked 2 hours ago