FIN 3501 FIN3501 Week 2 Individual Work 2 Taxes on Assets (Everest University)

FIN 3501 Week 2 Individual Work 2 Taxes on Assets (Everest University)

Problems 4, 5, 7, and 8:

4. You are in the 25 percent income tax bracket. What are the taxes owed or saved if you

5. Your traditional IRA account has stock of GFH, which cost $2,000 20 years ago when you     were 50 years old. You have been very fortunate, and the stock is now worth $23,000. You are in the 35 percent income tax bracket and pay 15 percent on long-term capital gains.

7. You are 60 years old. Currently, you have $10,000 invested in an IRA and have just received a lump-sum distribution of $50,000 from a pension plan, which you roll over into an IRA. You continue to make $2,000 annual payments to the regular IRA and expect to earn 9 percent on these funds until you start withdrawing the money at age 70 (i.e., after ten years). The IRA rollover will earn 9 percent for the same duration.

8. Bob places $1,000 a year in his IRA for ten years and then invests $2,000 a year for the next ten years. Mary places $2,000 a year in her IRA for ten years and then invests $1,000 a year for the next ten years. They both have invested $30,000. If they earn 8 percent annually, how much more will Mary have earned than Bob at the end of 20 years?