Charles and Martha (both age 30), cach saved $15,000 (pre tax) at the end of every year over their working lives. Both worked till age 65 years. Charles saved hismoney in a qualified pension plan while Martha saved in her personal account after paying taxes. Martha turned over her portfolio every year and the combinationof ordinary income on dividends and interest and capital gains on sale of stock came to a 20% tax rate on investment retums. If both generated a pretax retum of 6%per year and were in 25% marginal tax bracket throughout their lives, compute the difference in their net accumulated savings at retirement$167,137O $278,654$222,849O $696.535

Accumulated savings refers to the amount that is put back or invested in each period and interest is…

Answered: Charles and Martha (both age 30), each…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Flowers, a married taxpayer, purchased an annuity for $64,400 that will pay $700 per month over the life of Flowers and Flowers' spouse. At the time of purchase, the couple's joint life expectancy was 23 years. Flowers received payment beginning April 1, Year 1, amounting to $6,300 in the first year of the annuity contract. How much is includable in Flowers' gross income in the first year? $0 $2,100 $4,200 $6,300
Crystal received a $208,000 inheritance after taxes from her parents. She invested it at 8% interest compounded quarterly for 5 years. A year after receiving the inheritance, she sold one of her rental properties for $218,000 and invested that money at 7% compounded semiannually for 4 years. Both of the investments have now matured. How much money does Crystal have totaling both of these investments
Barry and Mary know that pension sharing can result in tax savings. Both are 65 years old and have been married for 35 years. Both have contributed to the Quebec Pension Plan (QPP) since age 18. Mary is a doctor and made more money than Barry over the years. Mary's QPP pension is $1,208/month while Barry's is $790/month. As a result of pension sharing, what will be Barry and Mary's monthly QPP benefit for tax reporting purposes? A Mary's QPP benefit has been reduced from $1,208 to $900 and Barry's benefit has also decreased from $790 to $482. B C Mary's QPP benefit has been reduced from $1,208 to $790 and Barry's benefit has increased from $790 to $890. Mary's QPP benefit has been decreased from $1,208 to $900 and Barry's benefit has increased $790 to $1,098. D Mary's QPP benefit has been reduced from $1,208 to $790 and Barry's benefit has increased from $790 to $1,208. E Mary's QPP benefit has been reduced from $1,208 to $1,052 and Barry's benefit has increased from $790 to $946.
Mr. Brandon dela Cruz, had the following during the taxable year: • P1,500,000 for outliving his life insurance policy. He paid quarterly premium of P3,000 for 25 years. • P2,500,000 as proceeds of her mother's life insurance resulting from her death. Premiums paid totaled P780,000. • Increase in the fair value of his stock investments, P25,000. • Cash gift from his missionary friend, P50,000. • House and Lot inherited from his mother, P3,000,000. . Rent Income from house and lot inherited, P100,000. Question: 1. How much of the amounts enumerated should not be reported as gross income? 2. How much is the total inclusions to gross income?
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Joseph Ray just received an inheritance of $35,775 from his great aunt. He plans to invest the funds for retirement. If Joseph can earn 4.75% per year with quarterly compounding for 32 years, how much will he have accumulated? (Round off to the nearest dollar.)
Amy earns an income of 50,000 this year as an employee of rooster enterprises. She pays the following amounts during the year: Contribution to Traditional IRA : 5000 PreTax Cuts and Jobs Act Alimony she paid to her ex husband: 10,000 Medical expenses: 6000 What is Amy's Adjusted Gross Income? (AGI) a. 29000 b. 34000 c. 35000 d. 39000

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