Question

If 30,000 after-tax dollars are invested at 7% in a single-premium tax-deffered annuity, how many after-tax dollars will be accumulated in 20 years

Answer 1

Answer:

$72,000

Explanation:

We need to first calculate the interest on investing $30,000 after 20 years at 7% in a single-premium tax-deffered annuity using the simple interest formula.

Simple interest = Principal * Rate * Time/100

Simple interest = $30,000*7*20/100

Simple Interest = $42,000

After-tax dollars that will be accumulated in 20 years = Initial investment + Interest = $30,000+$42,000 = $72,000

Hence, after-tax dollars that will be accumulated in 20 years is $72,000.