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16 December, 14:13

Matt recently deposited $31,250 in a savings account paying a guaranteed interest rate of 5.5 percent for the next 10 years. Required: If Matt expects his marginal tax rate to be 22.00 percent for the next 10 years, how much interest will he earn after-tax for the first year of his investment

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  1. 16 December, 17:18
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    Matt will earn $1,340.63 after-tax for the first year of his investment.

    Explanation:

    The interest to be received = amount of deposit * annual interest rate * (1 - tax rate)

    = $31,250 * 5.5% * (1-22%)

    = $1,340.63
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