John is trying to decide whether to contribute to a Roth IRA or a traditional IRA. He plans on making a $5,000 contribution to whichever plan he decides to fund. He currently pays tax at a 32 percent marginal income tax rate, but he believes that his marginal tax rate in the future will be 28 percent. He intends to leave the money in the Roth IRA or traditional IRA for 30 years, and he expects to earn a 6 percent before-tax rate of return on the account. (Use Table 1) Note: Do not round intermediate calculations. Round your final answers to nearest whole dollar amount. b. How much will John accumulate after taxes if he contributes to a traditional IRA (consider only the funds contributed to the
John is trying to decide whether to contribute to a Roth IRA or a traditional IRA. He plans on making a $5,000 contribution to whichever plan he decides to fund. He currently pays tax at a 32 percent marginal income tax rate, but he believes that his marginal tax rate in the future will be 28 percent. He intends to leave the money in the Roth IRA or traditional IRA for 30 years, and he expects to earn a 6 percent before-tax rate of return on the account. (Use Table 1) Note: Do not round intermediate calculations. Round your final answers to nearest whole dollar amount. b. How much will John accumulate after taxes if he contributes to a traditional IRA (consider only the funds contributed to the
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Qd.2
![Required information
[The following information applies to the questions displayed below.]
John is trying to decide whether to contribute to a Roth IRA or a traditional IRA. He plans on making a $5,000
contribution to whichever plan he decides to fund. He currently pays tax at a 32 percent marginal income tax rate, but he
believes that his marginal tax rate in the future will be 28 percent. He intends to leave the money in the Roth IRA or
traditional IRA for 30 years, and he expects to earn a 6 percent before-tax rate of return on the account. (Use Table 1.)
Note: Do not round intermediate calculations. Round your final answers to nearest whole dollar amount.
b. How much will John accumulate after taxes if he contributes to a traditional IRA (consider only the funds contributed to the
traditional IRA)?
After tax accumulation](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F8f6b9bf3-9222-4e20-9362-1764c39421ae%2F3a1be040-69d0-4de0-93bb-b5471f082817%2F90qsve_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Required information
[The following information applies to the questions displayed below.]
John is trying to decide whether to contribute to a Roth IRA or a traditional IRA. He plans on making a $5,000
contribution to whichever plan he decides to fund. He currently pays tax at a 32 percent marginal income tax rate, but he
believes that his marginal tax rate in the future will be 28 percent. He intends to leave the money in the Roth IRA or
traditional IRA for 30 years, and he expects to earn a 6 percent before-tax rate of return on the account. (Use Table 1.)
Note: Do not round intermediate calculations. Round your final answers to nearest whole dollar amount.
b. How much will John accumulate after taxes if he contributes to a traditional IRA (consider only the funds contributed to the
traditional IRA)?
After tax accumulation
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