Personal Fiance (Income Taxes and Banking) Homework help
Please see Problem below.
An investor has an investment that pays 8.5 percent before taxes and inflation. If the investor is in the 31 percent marginal tax bracket and the rate of inflation is 2.3 percent, what is the "real" or effective rate of return?
___a. 8.3045%
___b. 5.8650%
___c. 5.6695%
___d. 3.5650%
Please show me how you work the problem.
Thanks,
© BrainMass Inc. brainmass.com October 9, 2019, 4:24 pm ad1c9bdddfhttps://brainmass.com/business/personal-fiance-income-taxes-and-banking-homework-help-31676
Solution Preview
The correct answer is (d)
On a 8.5% rate of return, you would pay 0.31*8.5 = 2.635% ...
$2.19