You deposit $25,000 in the account to accrue interest for forty years. Account pays 4% compounded annually. Suppose that income tax on earned interest is 30%. Which of the given plans produces the larger balance after all income tax is paid?
(a) Deferred income tax on interest which is earned is paid in 1 lump sum at the end of forty years.
(b) Not Deferred income tax on interest which is earned each year is paid at end of every year.