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Solomon contributed $20,000 to his RRSP at the time when his marginal tax rate was 52%.At...

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Finance

Solomon contributed $20,000 to his RRSP at the time when hismarginal tax rate was 52%.At retirement,which he anticipated being20years from now,he expects to continue to have a marginal tax rateof 52%.Based on a discount rate of 5%,what is the present value ofthe amount of tax solomon will pay on a withdrawal of $20,000 fromhis RRSP in his first year of retirement ?

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3.9 Ratings (575 Votes)
Withdrawal at end of year retirement 20000Present value 20000 1520 10400Value at start of yearReturnsValue at end of    See Answer
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Transcribed Image Text

Solomon contributed $20,000 to his RRSP at the time when hismarginal tax rate was 52%.At retirement,which he anticipated being20years from now,he expects to continue to have a marginal tax rateof 52%.Based on a discount rate of 5%,what is the present value ofthe amount of tax solomon will pay on a withdrawal of $20,000 fromhis RRSP in his first year of retirement ?

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