How much interest will he earn after tax for the second year

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Reference no: EM131912966

Problem

Matt recently deposited $23,250 in a savings account paying a guaranteed interest rate of 3 percent for the next 10 years.

a. If Matt expects his marginal tax rate to be 20 percent for the next 10 years, how much interest will he earn after-taxfor the first year of his investment?

b. How much interest will he earn after tax for the second year of his investment if he withdraws enough cash every year to pay the tax on the interest he earns?

c. How much will he have in the account after 4 years?

d. How much will he have in the account after 7 years?

Reference no: EM131912966

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