Solomon contributed $20,000 to his RRSP at the time when his marginal tax rate was 52%.At...

80.2K

Verified Solution

Question

Finance

Solomon contributed $20,000 to his RRSP at the time when hismarginal tax rate was 52%.At retirement,which he anticipated being20years from now,he expects to continue to have a marginal tax rateof 52%.Based on a discount rate of 5%,what is the present value ofthe amount of tax solomon will pay on a withdrawal of $20,000 fromhis RRSP in his first year of retirement ?

Answer & Explanation Solved by verified expert
3.9 Ratings (575 Votes)
Withdrawal at end of year retirement 20000Present value 20000 1520 10400Value at start of yearReturnsValue at end of    See Answer
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Transcribed Image Text

Solomon contributed $20,000 to his RRSP at the time when hismarginal tax rate was 52%.At retirement,which he anticipated being20years from now,he expects to continue to have a marginal tax rateof 52%.Based on a discount rate of 5%,what is the present value ofthe amount of tax solomon will pay on a withdrawal of $20,000 fromhis RRSP in his first year of retirement ?

Other questions asked by students