A saving account earns a nominal rate i(©) = 0.06. If the income tax of the earnings from this account is at 25%, and suppose the annual inflation is at 2.4%, what is the annual after tax real rate of return? ) 0.0216 ) 0.0275 0.0205 0.0366

A saving account earns a nominal rate i(©) = 0.06. If the income tax of the earnings from this account is at 25%, and suppose the annual inflation is at 2.4%, what is the annual after tax real rate of return? ) 0.0216 ) 0.0275 0.0205 0.0366

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter22: Providing And Obtaining Credit

Section: Chapter Questions

Problem 14MC

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Concept explainers

Balance Sheet Regulations

A balance sheet is a financial statement that shows the position of a company's assets and liabilities on a specific date. The balance sheet is prepared after preparing the statement of profit and loss statement (income statement). The balance sheet and other financial statements differ in the sense that the balance sheet shows the financial position at any given point in time. In contrast, the other financial statements show the financial performance over a particular duration.

Question

A saving account earns a nominal rate i©) = 0.06 . If the income tax of the
earnings from this account is at 25%, and suppose the annual inflation is at 2.4%,
what is the annual after tax real rate of return?
0.0216
0.0275
0.0205
0.0366

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