Question

Mary has been a diligent investor. She invests $10,000 at the end of each year and earns 8% before taxes. She is in the 25% marginal tax bracket (meaning that dividends and capital gains will be taxed at 15%). She currently has $300,000 in the account. How much will she have in this account when she retires in 10 years?

$787,311

$716,073

$723,419

$799,215

Answer 1

Year	Account balance (beginning)	Interest 8%	Total balance at the end year	Tax 15%	Year end balance
1.00	3,00,000.00	24,000.00	3,24,000.00	3,600.00	330400.00
2.00	3,30,400.00	26,432.00	3,56,832.00	3,964.80	362867.20
3.00	3,62,867.20	29,029.38	3,91,896.58	4,354.41	397542.17
4.00	3,97,542.17	31,803.37	4,29,345.54	4,770.51	434575.04
5.00	4,34,575.04	34,766.00	4,69,341.04	5,214.90	474126.14
6.00	4,74,126.14	37,930.09	5,12,056.23	5,689.51	516366.72
7.00	5,16,366.72	41,309.34	5,57,676.05	6,196.40	561479.65
8.00	5,61,479.65	44,918.37	6,06,398.03	6,737.76	609660.27
9.00	6,09,660.27	48,772.82	6,58,433.09	7,315.92	661117.17
10.00	6,61,117.17	52,889.37	7,14,006.54	7,933.41	716073.14

Correct option is B

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