Contemporary Mathematics for Business & Consumers 8th Edition by Robert Brechner,Geroge Bergeman

Exercise 8

You are a manager for Vector International. You earn $50,000 per year and are in the 28% federal income tax bracket. Each year you contribute $2,500 tax free to your individual retirement account, IRA. The account earns 8% annual interest. In addition, the amount of tax that you save each year by making these "pre-tax" contributions is invested in a taxable aggressive growth mutual fund averaging 15%.
a. How much tax do you save each year by making the retirement fund contributions
b. How much will the retirement fund be worth in 30 years
c. Although the income from this investment is taxable each year, how much will the "tax savings" fund be worth in 30 years