HP 10bII - Gains that Go Untaxed until Withdrawal

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52,713.28
Stores
amount
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Stores
amount
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12.00
Sets
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per
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@@®@® 144.00 Stores number of
deposits.
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9.00
Stores
interest
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-204.54
Calculates
monthly
deposit
required.
Gains That Go Untaxed Until Withdrawal
You can use the TVM application to calculate the future value of a tax-
free or tax-deferred account. (Current tax laws and your income
determine whether both interest and principal are tax-free. You can solve
for either case.)
The purchasing power of that future value depends upon the inflation
rate and the duration of the account.
Example. You аге considering opening a tax-deferred account with a
dividend rate of 8.175%. If you invest $2,000 at the beginning of each
year for 35 years, how much will be in the account at retirement? How
much will you have paid into the account? How much interest will you
have earned? If your post-retirement tax rate is 15%, what will the after-
tax future value of the account be? Assume that only the interest is taxed
(assume the principal was taxed before deposit). What is the purchasing
power of that amount, in today’s dollars, assuming a 4% inflation rate?
110 8: Additional Examples