Phil and Emily Brooks Have Three Sons, Jason, 16, Tom

question 87

Essay

Phil and Emily Brooks have three sons, Jason, 16, Tom, 12, and Adam, 10. They create a Colorado 529 plan for each of their sons by investing $10,000 in three different plans. Each of these investments yields a constant return of 6.5 percent. When they turned 18, Jason and Adam withdrew the funds in their 529 plans and used the money for higher education expenses while Tom withdrew the funds in his 529 plan to start a new business. Assuming that each of the sons have a 15 percent marginal tax rate when they turn 18, how much money will each of the three boys have after paying all applicable taxes due? (Round all interim and final calculations to the nearest whole number)

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Definitions:

Barriers to Entry

Factors that prevent or hinder new competitors from easily entering an industry or market, such as high startup costs, strict regulations, or control of key resources.

National Income

The total value of all goods and services produced by a country over a specific period, usually measured annually.

Wages and Salaries

The financial compensation received by employees for their labor, typically determined on an hourly, daily, or contractual basis.

Labor's Share

The segment of a country's income or production assigned to employees through wages, salaries, and perks.