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Suppose you are a manager for a certain company. You earn $50,000 per year and are in the 28% federal income tax bracket. Each year you contribute $5,500 tax free to your individual retirement account, IRA. The account earns 7% annual interest. In addition, the amount of tax that you save each year by making these "pre-tax" contributions is invested in a taxable aggressive growth mutual fund averaging 16%. (a) How much tax do you save (in $) each year by making the retirement fund contributions ? (b) Using Table 12-1, much will the retirement fund be worth (in $) in 30 years? (Round your answer to the nearest cent.) (c) Although the income from this investment is taxable each year, using Table 12-1, how much will the "tax savings" fund be worth (in $) in 30 years? (Round your answer to the nearest cent.) $ TABLE 12-1 Future Value (Amount of an Ordinary Annuity of 35 55 Periods 1 2 3 4 1% 25 1.XX 1.OXXO 1.000.000 1.00000 1.00000 2.00500 2.01000 2.01500 2.02000 2.03000 3.01 502 3.03010 3.04522 3.010 3.09090 4.03010 4.60 4.09090 4.12161 4.18363 5.05025 5.10101 5.15227 5.20104 5.30914 1.00000 1.000,00 1.00000 2.04000 2.05000 2.00000 3.12160 3.15250 3.18360 4 24646 431013 437462 5.52563 5.63709 75 1.00000 2.07000 3.21190 443994 5.75074 8% 1.XXX 2.08000 3.34610 4.5611 Periods 1 2 3 4 5 5 6 6 7 8 6,07550 6.15202 6.22955 6.30812 6.446841 6,63298 6.80191 6.97532 7.15329 7.10588 7.21354 7.32299 7.43428 7.66246 789829 8.1-4201 8.39384 865402 814141 8.28567 8.43284 8.58297 889234 9.21423 951911 9.89747 10.25980 9.18212 9.36853 9.55933 9.75463 10.15911 10.58280 11.02656 11.49132 11.97799 10.22803 10.46221 10.70272 10.91972 11.46388 12.00611 12.57789 13.18079 13.81645 7.33593 8.92280 10.63663 12.48756 14.48656 7 8 9 9 10 10 11 11 12 13 11.21917 11.56683 11.86326 12.16872 12.80780 13.48635 14.30679 14.97164 15.78360 16.64519 12.33556 12.68250 13.01121 13.41209 14.19203 15.02581 15.91713 16.86994 17.88845 18.97713 13.39724 13.80933 14.23683 1468033 15.61779 16.62684 17.71298 18.88214 20.14061 21.49530 14.46423 14.94742 15:45038 1597394 17.08632 18.29191 19.59863 21.01507 22 55049 24.21492 15.53655 16.09690 16.68214 17.29342 18.59891 20.02359 21.57856 23.27597 25.12902 27.15211 12 13 14 15 IS 16 17 18 19 20 16,61423 17.25786 17.93237 18.63929 20.15688 2182453 23.65749 25,67253 27.88805 30.32428 17.69730 18.43014 19.20136 20.01207 21.76159 23.69751 25.84037 28.21288 30.84022 33.75023 18.78579 19.61475 20.48938 21.41231 23.41444 25,64541 28.132.18 30.9056533.99903 37.45024 19.87972 20.81090 21.79672 22.84056 25.11687 27.67123 30.53900 33.75999 37.378% 41.44626 20.97912 22.01900 23.12367 24.29737 26.87037 29.77808 33.06595 36.7855940.99549 45.76196 16 17 18 19 20 21 22 23 22.08401 23.23919 24.47052 25.78332 28.67649 31.96920 35.71925 39.9927344.86518 50.42292 23.1944) 24,47159 25.83758 27.29898 30.53678 34.24797 38.5052143.39229 49.00574 55.45676 24.31000 25.71630 27.22514 28.84196 32.45288 36.61789 41.4301846.99583 53.43614 60.89330 25.431% 26.97346 28.63352 10:42186 34.42647 39,08260 44.S0200 50.81558 58.17667 66.76476 26.55912 28.24320 30.06302 32.0.3030 36.45926 41.64591 47.72710 54.86451 63.24904 73.10594 21 22 23 25 26 27 26 27 28 29 30 27.69191 29.52563 31.51397 33.67091 38.55304 4431174 51.11345 59.15638 68.67647 79.95442 28.83037 30.82089 32.98668 35.34432 40.70963 47.08421 54.66913 63.70577 74.4838287.35077 29.97452 32.12910 3448148 37.05121 4293092 49.96758 58 40258 68.5281180.69769 95.33883 31.12439 33.45019 35.99870 38 79223 45.21885 52.96629 62 32271 73.63980 87.34653 102.96594 32.28002 3.78489 37.53868 40.56808 47.57542 56.08494 66.43885 79.05819 94.46079 113.28321 30 31 32 33 34 35 36 33.44142 36.13274 39.10176 42.37944 50.00268 59.32834 70.76079 84.80168 102.07304 123.34587 34.60862 37.49407 40,68829 14.22703 52 50276 62.70147 75.29883 188978 110.21815 134 21354 35.78167 38.8690142.29861 16.11157 55.07784 66.20953 80,06377 97.34316 118.93343 145.95062 36.96058 40 257704393309 48.03380 $7.73018 6985791 85.06696 10418375 128 25876 158,62667 38.14538 41.66028 45.59209 49.99448 60.46208 73.65222 90.32031 111.43478 138.23688 172.31680 39.33610 43.07688 47.27597 51.99437 63.27594 77.59831 95.83632 119.12087 148.91346 187.10215 31 32 33 34 15 36 (1 + 0-1 The values in Table 12-1 were generated by the formula and rounded to five decimal places, where i is the interest rate per period and n is the total number of periods. TABLE 12-1 Futute Value (Amount of an Ordinary Annuity of $1 Continued 94 Periods 1 2 3 10% 134 145 155 1.OKOO 1.00000 100000 1.000 10000 1.00000 10000D 2.09000 2.10000 2.11000 2.12000 2.13000 2.19000 2.15000 3.27810 3.31000 34210337440 34000 343900 347250 4.57313 464100 4.70973 4.77933 454980 492114 499338 5.98471 6.10510 6.22780635285 6.48027 6.61010 674238 165 1.000 2.16000 3.50560 5.06650 687714 175 1.000 2.17000 3.5390 5.14051 70140 185 Periods 1.000001 2.18000 2 337240 3 5.215434 7.154215 4 5 6 7 8 7.52333 771561 7.91286 8.11519 8.32271 8.53553 *75374 897748 9.20043948717 9.78327 10.0891 10.40166 10.73649 11.06680 11.41367 11.02847 11.43589 11.8590 12.29% 12.75726 13.23076 13.72682 14.34009 13.02:04 13.57948 14.16397 14.77566 15.41571 16,0853516.78584 17.51851 15.19293 15.93742 16 72201 1734874 18 41975 19.3373020 30372 2132147 9.2685 9.44197 6 11.77201 12.141527 14.77325 15.327008 18.28471 19.085859 22.39311 2352131 10 9 10 11 12 13 1756029 18.53117 19:561420.65458 21.81430 2042 243492825.73190 20.14072 21.38428 2271319 34.13313 25.65018 27.2707529.00167 30.85017 22.95338 24 52271 26.21164 28.02911 29,98470 32.0586634.35192 3678620 26.01919 2797498 30.09492 12.39360 34.88271 3758107 10.50471 43.67199 29.30092 31.77248 34.40536 37.27971 4041746 43.53414758041 51.65951 27.19994 28.75514 11 32.82393 493107 12 39,403994221866 13 47.10267 50.81802 14 36.11013 60.96527 15 15 16 17 18 19 33.00340 35.94973 39.18995 42.7532846.67173 $0.99036 55,717476092503 66.64885 72.93901 16 36.9737040.54470 44 0054 4888367 53.73906 59.11760 66.07509 71.67303 78.97915 87.06804 17 41.3013445.59917 $0.39594 55.74971 61.72514 68.399 5.3636 84.14072 93.40561 103.74028 18 46.01846 51.15409 5699949 63.49968 7074941 78.9623821181 98.60123110.28456 123.41353 19 51.16012 57.27500 64.20283 72.05344 80916.83 91.09-99 10244358 115.07975 130.03294 146.62797 20 20 21 23 24 28 56.76453 64.00250 72.36814 81.199874 92.466792 104.76842 118.81012 134.84051 153.13854 174.02100 21 6287334 7140275 81.21431 92.50058 105 19101 121.43600 13763164 157.41499 180 17209 206, 34479 22 69.83194 79.54302 91.14788 10460219 1202048413829704 159.27638 183.60138 211.80134 244.486RS 23 76.78981 68.49733 102.17415 118.15534 136.80147 15865862 184.16784 213.97761 248.80757 289.49448 24 84.70090 98.34706 114.41331 13333387 155 61956 181.87083 21279302 249.21402292.10486 342.60349 25 27 28 29 10 93.32398 109.18177 127.99577 150.33393 17625010 20833274 245.71197 29008527 142.76268 40527211 26 102.72313 121.09994 143.07564 109.37401 200 84061 238.9983 25356877 337.50239 40203234 479.22109 27 112.96822 134,30994 19931729 19069889 227.90989 272.58923 327.10308 392.50277 47137783 566.48089 28 124.13536 148,63093 178.39719 21458275 288.58338 312.09373 377,16%69 456,30322 552 51207 669.44745 29 136,30754 164.49402 199.02086 241.33268 293.19922356.7865 434.74515 53031173 647.43912 790.947990 31 149.57522 181.94342 221.91317271 29261 33231511 407.73701 500 95692 61616161758 50977 93431863 31 32 16403699 20113777 34732362 304.84772 3765160846560019 577.10046 755.74746 888.449411103.-29598 32 33 179.80032 222.25154 275.52922 342.42945 426 46317 532.01501661.66552 331.2706 1000.48581 130312526 33 34 19698234 245.47670 206.83744 384.52098482.90038 60751991 765.36535 %5.20979 1218.36699 1538.68781 34 35 215.71075 271.02437 341.58033 43166350 546.6505693.57270851.17016 112071295 1426 49102 116.65161 35 36 236.12472 299.12681 380.16+41 454 46312 618.74933 791,67388 1014.34568 1301.02703 1669 99450 2144.67890 36 The values in "Table 12-1 were generated by the formula rate per period and is the total number of periods. and rounded to five decimal places, where i is the interest

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