You Are Depositing $4,500 Today at an Annual Interest Rate

question 7

Multiple Choice

You are depositing $4,500 today at an annual interest rate of 7.2 percent. How much additional interest will you earn if you leave the money invested for 45 years instead of 40 years?

• A) $25,723.08
• B) $30,185.14
• C) $22,441.56
• D) $6,370.69
• E) $11,590.93

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Definitions:

After-Tax Cost

The actual cost of an investment or loan after taking into account the effects of taxation on its returns or costs.

Semi-Annual Coupon Rate

The interest rate on a bond that pays out interest twice a year.

Corporate Marginal Tax Rate

The tax rate that a corporation pays on its last dollar of taxable income, which can impact corporate investment decisions and strategies.

Marginal Tax Rate

The percentage of tax levied on the last dollar of an income earner's taxable income, reflecting the tax applied to each income level for which the taxpayer is eligible.