Suppose the personal income tax is set at 33(1/3)%. An individual earns an extra $2000 each year and pays income taxes on these earnings and at the end of each year places the remaining funds $2000(2/3) into a regular savings account in which the interest in the account is subject to the personal income tax mentioned before. If the account earns an annual interest rate of 9% compounded annually and the individual pays income taxes owed on the interest out of these funds, how much is in the account at the end of 40 years?

Question

anonymous · Answer

IT would be roughly...

anonymous · Answer

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anonymous · Answer

I don't think that's the right answer haha...

anonymous · Answer

I don't know how to solve it but I remember the compound interest formula, hope it will work.

FV = PV ( 1+i )^n

Where
FV= Future Value
PV= Present Value
i = Interest rate
n = Number of years