Invests the amount saved in income taxes

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Reference no: EM13808255

Twins Invest. Kathryn Ake, of Omaha, Nebraska, plans to invest $3000 in mutual fund for the next 25 years to accumulate savings for retirement. Her twin sister, Kristin, plans to invest the same amount for the same length of time in the same mutual fund. Instead of investing with after-tax money, Kristin will invest through an employer-sponsored retirement plan. If both mutual fund accounts provide an 8 percent rate of return, how much more will Kristin have in her retirement account after 40 years? How much will Kristin have if she also invests the amount saved in income taxes? Assume both women pay income taxes at a 25% rate.

Reference no: EM13808255

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