You put $6,500 into a Roth IRA and invest everything in a corporate bond fund.  The fund has an annual expense ratio of 1.5%.  Your expected annual return is 8.5%, your current tax rate is 35%, and you expect your tax rate in retirement to be 25%.  The long-term capital gains rate is 15% and the short-term capital gains rate is 35%.  What is the after-tax future value of your investment in 20 years?

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
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You put $6,500 into a Roth IRA and invest everything in a corporate bond fund.  The fund has an annual expense ratio of 1.5%.  Your expected annual return is 8.5%, your current tax rate is 35%, and you expect your tax rate in retirement to be 25%.  The long-term capital gains rate is 15% and the short-term capital gains rate is 35%.  What is the after-tax future value of your investment in 20 years?

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