If Thomas has a 40% tax rate and a 6% after-tax rate of return, $50,000 of income in five years will cost him how much tax in today's dollars (rounded)?

Name: If Thomas has a 40% tax rate and a 6% after-tax rate of return, $50,000 of income in five years will cost him how much tax in today's dollars (rounded)?
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Quizplus · Accepted Answer

The tax on $50,000 at a 40% rate is $20,000. Discounting $20,000 at a 6% rate for five years gives approximately $14,940 in today's dollars.

If Thomas Has a 40% Tax Rate and a 6