Suppose instead you invest the 100000 in preferred stock


Question: Suppose you invest $100,000 in a mutual fund for 10 years. The fund earns6% pretax per year, makes no annual distributions (and thus there is noincome to be taxed each year) and you sell the fund at the end of the 10years. You pay a 20% tax on capital gains and a 40% tax on ordinaryincome. What is the pre-tax total dollar accumulation at the end of 10 years? What is the after-tax total dollar accumulation at the end of 10 years? Suppose instead you invest the $100,000 in preferred stock paying 6% perannum with the dividend taxed at 20% per year (as dividends receive theirown tax preferred rate). What is the after-tax total dollar accumulation at the end of 10 years?

Solution Preview :

Prepared by a verified Expert
Accounting Basics: Suppose instead you invest the 100000 in preferred stock
Reference No:- TGS02496799

Now Priced at $15 (50% Discount)

Recommended (97%)

Rated (4.9/5)