Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. please explain the steps. a 30-year-old buys, f

Please explain the steps. A 30-year-old buys, for $8,000 (in year...

90.2K

Verified Solution

Question

Accounting

Please explain the steps.
image
A 30-year-old buys, for $8,000 (in year 0 ), an $8,000 Registered Retirement Savings Plan (RRSP) bond that will pay 5% ( $400 per year) into the plan for the next 40 years, and will then be redeemed for $8,000 plus accumulated interest. The payments go into the RRSP (starting at year 1) and also earn 5% per year. Because it is an RRSP, the purchaser receives an immediate tax rebate of $8,000 times the marginal tax rate (at a marginal tax rate of 36% ). The purchaser will pay no taxes on the annual interest earned until the end of the 40 years, when the original amount and all earned interest are withdrawn and taxed (at a future marginal rate of 26% ). At age 70, when the RRSP is redeemed, taxes must be paid on both the original $8,000 and the accumulated interest. What is the rate of return on this investment, rounded to the nearest tenth of a percent

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

Homework C1S6 Question 9 of 9 1 point Question Attempt 1 of Unlimite Use transformations...

Geometry
Q

1)  You are consulting with the physical therapy department on a patient with long term renal failure....

Medical Sciences
Q

If the volume of a cone is 314m and the height is 13 What is...

Basic Math
Q

F Note that if you click on the graph it will display a larger version...

Basic Math
Q

Solve the system of linear equations by graphing.(2x-y=03x+y=5

Basic Math
Q

Hugo averages 58 words per minute on a typing test with a standard deviation of...

Statistics
Q

Which of the following places will receive the most orographic rainfall O Mumbai O Islamabad...

Algebra
Q

On January 1, 2024, the general ledger of Grand Finale Fireworks includes the following account...

Accounting
Q

90 on July 2020 Ble Wednesday ud acquired and...

Accounting
Q

Prairie Wolf (PW) designs and produces car parts. In 2015, actual variable manufacturing overhead is...

Accounting
Q

How do you solve the whole of questions P6-12 and E7-6 in the Accounting textbook?...

Accounting
Q

6. G arof 4% RPM of calculate the market 3. Gar r era 1 beta...

Finance