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Required information [The following information applies to the questions displayed below.] In 2019, Nina contributes 10...

Required information

[The following information applies to the questions displayed below.]

In 2019, Nina contributes 10 percent of her $100,000 annual salary to her 401(k) account. She expects to earn a 7 percent before-tax rate of return. Assuming she leaves this (and any employer contributions) in the account until she retires in 25 years, what is Nina’s after-tax accumulation from her 2019 contributions to her 401(k) account? (Use Table 1, Table 2.) (Round your intermediate calculations and final answer to the nearest whole dollar amount.)

a. Assume Nina’s marginal tax rate at retirement is 30 percent.

After tax proceeds from distribution$____

b. Assume Nina’s marginal tax rate at retirement is 20 percent.

After tax proceeds from distribution$____

c. Assume Nina’s marginal tax rate at retirement is 40 percent.

After tax proceeds from distribution$____

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Answer #1
a b c

Before tax contribution

10,000 10,000 10,000
Time future value factor (1.07^25) 5.42743 5.42743 5.42743
Future value of contribution 54,274 54,274 54,274
Tax % 30% 20% 40%
Less:Taxes payable on distribution 16,282 10,855 21,710
After tax proceeds from distribution 37,992 43,419 32,565
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