Calculate the additional money you could spend on vacation

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Reference no: EM131543962

14 so You must decide when to go on a vacation. Q is after graduation. The other One is to wait and go after spending 2 years with the Peace Corps. Assume the vacation costs $2500 now, and your annual income tax rate is 20% now. and is expected to continue to be 20% during the net 2 years. Also assume the annual inflation rate for a week's trip to Hawaii (hotel included) is 4%.

(a) Calculate the additional money you could spend on your vacation, after taxes, by putting your vacation money ($2500) into a taxable investment at 6% per year before taxes) and waiting 2 years until after you come out of the Peace Corps compared to taking your well-deserved vacation now.

(b) If your tax rate drops to 0%, while you're in the Peace Corps, how much additional money will you have for your vacation? Contributed by D. P. Loucks, Cornell Universiry.

Reference no: EM131543962

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