Escobar and Rose Are Both Age 36 and File a Joint

question 120

Multiple Choice

Escobar and Rose are both age 36 and file a joint return.Neither is covered under an employer plan.Escobar earned $121,000 of compensation in 2017.Rose worked part-time and earned $1,200.What is the maximum combined deductible IRA contribution they can make in 2017?

• A)$0.
• B)$5,500.
• C)$6,700.
• D)$11,000.

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Definitions:

Opportunity Costs

The potential benefits missed out on when choosing one alternative over another.

IRR

The Internal Rate of Return is a financial metric used to estimate the profitability of potential investments, calculated as the rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero.

NPV

Net Present Value; a financial metric used to evaluate the profitability of an investment, calculated by subtracting the initial investment from the present value of cash inflows.

AAR

Average Annual Return; calculating the mean annual return of an investment over a specified time period.