Assuming a 1-year, money market account investment at 4.38 percent (APY), a 2.91

Question

Assuming a 1-year, money market account investment at 4.38 percent (APY), a 2.91% inflation rate, a 28 percent marginal tax bracket, and a constant $50, 000

balance, calculate the after-tax rate of return, the real return and the total monetary return. What are the implications of this result for cash management decisions? Assuming a 1-year, money market account investment at 4.38 percent (APY), a 2.91% inflation rate, a 28 percent marginal tax bracket, and a constant $50, 000

balance, calculate the after-tax rate of return, the real return and the total monetary return. What are the implications of this result for cash management decisions?

Question - Assuming a 1-year, money market account investment at 4.38 percent (APY), a 28 percent marginal tax bracket, and a constant $50, 000 balance the after-tax rate of return is ? %.(Round to two decimal places.)

Explanation / Answer

Account Balance = 50,000

Annual Percentage Yield (APY) = 4.38%

Marginal Tax Bracket (T)= 28%

In this question, the after tax rate of return would be = APY * (1 - T)

= 4.38 % * (1- .28)

=4.38% * 0.72

=3.15%

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.