Cooper can invest $10,000 after- tax dollars in a taxable bond either outside or inside a traditional nondeductible IRA. He will hold the investment for ten years. The bond yields 6% before taxes and Cooper's marginal tax rate is 33%. If he invests directly in the bond, he will withdraw an amount of interest each year sufficient to pay taxes and leave the remaining interest in the investment. What are the after- tax accumulations in the bond and in the IRA? Cooper will not be subject to the 10% penalty tax when the IRA withdrawal occurs.

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The Answer of Cooper can invest $10,000 after- tax dollars in a taxable bond either outside or inside a traditional nondeductible IRA. He will hold the investment for ten years. The bond yields 6% before taxes and Cooper's marginal tax rate is 33%. If he invests directly in the bond, he will withdraw an amount of interest each year sufficient to pay taxes and leave the remaining interest in the investment. What are the after- tax accumulations in the bond and in the IRA? Cooper will not be subject to the 10% penalty tax when the IRA withdrawal occurs.

Cooper Can Invest $10,000 After- Tax Dollars in a Taxable