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Tax-deferred annuities pay no taxes on the income placed into the account but then pay taxes on all the r it its withdrawn. Nondeferred plans pay taxes on the income prior to depositing the money into the accour only pay taxes on the interest earned by the account. Given the amount set aside in an ordinary annuity E the current tax rate, the number of years that contributions will be made to the annuity, and the tax rate wi withdraws from the annuity are made, complete parts a through c. Current Tax Rate 30% Monthly Number of Annual Interest Payment Years $500 40 Rate 3.2% Future Tax Rate 35%

Tax-deferred annuities pay no taxes on the income placed into the account but then pay taxes on all the r it its withdrawn. Nondeferred plans pay taxes on the income prior to depositing the money into the accour only pay taxes on the interest earned by the account. Given the amount set aside in an ordinary annuity E the current tax rate, the number of years that contributions will be made to the annuity, and the tax rate wi withdraws from the annuity are made, complete parts a through c. Current Tax Rate 30% Monthly Number of Annual Interest Payment Years $500 40 Rate 3.2% Future Tax Rate 35%

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Tax-deferred annuities pay no taxes on the income placed into the account but then pay taxes on all the money when it its withdrawn. Nondeferred plans pay taxes on the income prior to depositing the money into the account and then only pay taxes on the interest earned by the account. Given the amount set aside in an ordinary annuity each month, the current tax rate, the number of years that contributions will be made to the annuity, and the tax rate when withdraws from the annuity are made, complete parts a through c. Current Tax Rate 30% Monthly Number of Annual Interest Payment Years $500 40 Rate 3.2% a. Find the value of the tax-deferred and the nondeferred accounts. The future value of the tax-deferred account is $ 485,722.04. The future value of the nondeferred account is $ 340,005.43. (Round to the nearest cent as needed.) Future Tax Rate 35% b. Calculate the interest that was earned in both accounts. This will be the value of the account minus the payments made. in interest. in interest. The tax-deferred account earned $ The nondeferred account earned $ (Round to the nearest cent as needed.)
Transcribed Image Text:Tax-deferred annuities pay no taxes on the income placed into the account but then pay taxes on all the money when it its withdrawn. Nondeferred plans pay taxes on the income prior to depositing the money into the account and then only pay taxes on the interest earned by the account. Given the amount set aside in an ordinary annuity each month, the current tax rate, the number of years that contributions will be made to the annuity, and the tax rate when withdraws from the annuity are made, complete parts a through c. Current Tax Rate 30% Monthly Number of Annual Interest Payment Years $500 40 Rate 3.2% a. Find the value of the tax-deferred and the nondeferred accounts. The future value of the tax-deferred account is $ 485,722.04. The future value of the nondeferred account is $ 340,005.43. (Round to the nearest cent as needed.) Future Tax Rate 35% b. Calculate the interest that was earned in both accounts. This will be the value of the account minus the payments made. in interest. in interest. The tax-deferred account earned $ The nondeferred account earned $ (Round to the nearest cent as needed.)
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