Assuming a 1-year, money market account investment at 2.122.12 percent (APY), a 0.810.81 percent inflation rate, a 3333 percent marginal tax bracket, and a constant $60 comma 00060,000 balance, calculate the after-tax rate of return, the real rate of return, and the total monetary return. What are the implications of this result for cash management decisions? Question content area bottom Part 1 Assuming a 1-year, money market account investment at 2.122.12% (APY), a 3333% marginal tax bracket, and a constant $ 60 comma 000$60,000 balance, the after-tax rate of return is enter your response here%. (Round to two decimal places.) Part 2 Assuming a 1-year, money market account investment at 2.122.12% (APY), a 3333% marginal tax bracket, and a constant $ 60 comma 000$60,000 balance, the after-tax monetary return is $enter your response here. (Round to the nearest dollar.) Part 3 Given an after-tax return of 1.421.42% and an inflation rate of 0.810.81%, the after-tax real rate of return is enter your response here%. (Round to two decimal places.) Part 4 Given an after-tax return of 1.421.42% and an inflation rate of 0.810.81%, the after-tax real monetary return is $enter your response here. (Round to the nearest dollar.) Part 5 What is the implication of this result for cash management decisions? (Select the best answer below.) A. No implication can be drawn from this information. B. The implication is that it is difficult to do any more than keep up with taxes and inflation with liquid assets. Therefore, only the amount needed for financial emergencies and short-term goals should be placed in assets with such a low risk-return ratio. Additional funds should be invested elsewhere for a higher return. C. The implication is that it is easy keep up with taxes and inflation with liquid assets. Therefore, not only should the amount needed for financial emergencies and short-term goals be placed in liquid cash assets but additional funds should also be invested here. D. The implication is that it is difficult to do any more than keep up with taxes and inflation with money market account investments so these funds should be put in higher-yielding investments like stocks and long-term bonds.
Assuming a 1-year, money market account investment at 2.122.12 percent (APY), a 0.810.81 percent inflation rate, a 3333 percent marginal tax bracket, and a constant $60 comma 00060,000 balance, calculate the after-tax rate of return, the real rate of return, and the total monetary return. What are the implications of this result for cash management decisions? Question content area bottom Part 1 Assuming a 1-year, money market account investment at 2.122.12% (APY), a 3333% marginal tax bracket, and a constant $ 60 comma 000$60,000 balance, the after-tax rate of return is enter your response here%. (Round to two decimal places.) Part 2 Assuming a 1-year, money market account investment at 2.122.12% (APY), a 3333% marginal tax bracket, and a constant $ 60 comma 000$60,000 balance, the after-tax monetary return is $enter your response here. (Round to the nearest dollar.) Part 3 Given an after-tax return of 1.421.42% and an inflation rate of 0.810.81%, the after-tax real rate of return is enter your response here%. (Round to two decimal places.) Part 4 Given an after-tax return of 1.421.42% and an inflation rate of 0.810.81%, the after-tax real monetary return is $enter your response here. (Round to the nearest dollar.) Part 5 What is the implication of this result for cash management decisions? (Select the best answer below.) A. No implication can be drawn from this information. B. The implication is that it is difficult to do any more than keep up with taxes and inflation with liquid assets. Therefore, only the amount needed for financial emergencies and short-term goals should be placed in assets with such a low risk-return ratio. Additional funds should be invested elsewhere for a higher return. C. The implication is that it is easy keep up with taxes and inflation with liquid assets. Therefore, not only should the amount needed for financial emergencies and short-term goals be placed in liquid cash assets but additional funds should also be invested here. D. The implication is that it is difficult to do any more than keep up with taxes and inflation with money market account investments so these funds should be put in higher-yielding investments like stocks and long-term bonds.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Assuming a 1-year, money market account investment at
2.122.12
percent (APY), a
0.810.81
percent inflation rate, a
3333
percent marginal tax bracket, and a constant
$60 comma 00060,000
balance, calculate the after-tax rate of return, the real rate of return, and the total monetary return. What are the implications of this result for cash management decisions?Question content area bottom
Part 1
Assuming a 1-year, money market account investment at
rate of return is
2.122.12%
(APY), a
3333%
marginal tax bracket, and a constant
$ 60 comma 000$60,000
balance, the after-tax enter your response here%.
(Round to two decimal places.)Part 2
Assuming a 1-year, money market account investment at
2.122.12%
(APY), a
3333%
marginal tax bracket, and a constant
$ 60 comma 000$60,000
balance, the after-tax monetary return is
$enter your response here.
(Round to the nearest dollar.)Part 3
Given an after-tax return of
1.421.42%
and an inflation rate of
0.810.81%,
the after-tax real rate of return is
enter your response here%.
(Round to two decimal places.)Part 4
Given an after-tax return of
1.421.42%
and an inflation rate of
0.810.81%,
the after-tax real monetary return is
$enter your response here.
(Round to the nearest dollar.)Part 5
What is the implication of this result for cash management decisions? (Select the best answer below.)
No implication can be drawn from this information.
The implication is that it is difficult to do any more than keep up with taxes and inflation with liquid assets. Therefore, only the amount needed for financial emergencies and short-term goals should be placed in assets with such a low risk-return ratio. Additional funds should be invested elsewhere for a higher return.
The implication is that it is easy keep up with taxes and inflation with liquid assets. Therefore, not only should the amount needed for financial emergencies and short-term goals be placed in liquid cash assets but additional funds should also be invested here.
The implication is that it is difficult to do any more than keep up with taxes and inflation with money market account investments so these funds should be put in higher-yielding investments like stocks and long-term bonds.
AI-Generated Solution
AI-generated content may present inaccurate or offensive content that does not represent bartleby’s views.
Unlock instant AI solutions
Tap the button
to generate a solution
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education