Gabrielle is the first person in her family to attend university. As an accounting major her relatives look to her for financial information and guidance. During a recent family dinner, her relatives asked the following questions.Uncle Louis: My 8-year-old grandson will be attending college in 10 years. As a result, I just opened a savings for him and deposited $7,000 into it. What will be the value of the account in 10 years if the interest rate is 4.0 percent compounded annually? My brokerage firm offers two different savings accounts. One savings account provides a tax-free yield of 7%, while another savings account provides a taxable yield of 9.5%. If I am in the 28% marginal tax bracket, which account provides a better return on my savings?

Answers

Answer 1
Answer:

Gabrielle should recommend that Uncle Louis open the tax-free savings account. Gabrielle should inform Uncle Louis that the value of the account after ten years would be approximately $10,996.31 if the interestrate is 4.0 percent compounded annually.

Gabrielle must calculate which of the accounts offers a better return on his savings given that he is in the 28 percent marginal tax bracket. Firstly, the taxable savings account provides a yield of 9.5 percent. After accounting for taxes, the after-tax yield would be: 9.5% × (1 – 0.28) = 6.84 percent.

As the name implies, this account is tax-free, which means there is no tax liability. As a result, the after-tax yield is 7 percent. Given the above, the tax-free savings account offers a better return on Uncle Louis' savings.

Therefore, Gabrielle should recommend that Uncle Louis open the tax-free savings account.

Know more about interest rate here:

brainly.com/question/13324776

#SPJ11


Related Questions

In 1 or 2 sentences, define intellectual property and list the four ways that the government provides intellectual property rights.
A high unemployment rate is an indicator for low economic
If 200 people have been working on developing a new community that will feature houses and small businesses, what will happen to the PPC of the community if 100 people withdraw from developing the community?A.)the PPC will shift to the right B.)the PPC will shift to the left C.)the PPC will not change D.)the PPC will become steeper
A restaurant is a workplace for someone whose career specialty is inlodging services. food and beverage services. recreation and amusement. travel and tourism.
When a woman died, a deed was found in her desk drawer. the deed had been signed, dated, and acknowledged but not recorded. the deed gave the woman's house to a local charity. the will, however, provided that "i leave all of the real and personal property that i own to my beloved nephew." in this situation, the house most likely will go to the?

A print advertisement to encourage people to consume more milk shows the picture of a celebrity with a glass of milk in her hand. Which persuasive technique is implemented in this ad? bandwagon effect endorsement expert recommendation association of ideas

Answers

The right answer for the question that is being asked and shown above is that: "bandwagon effect." A print advertisement to encourage people to consume more milk shows the picture of a celebrity with a glass of milk in her hand. The persuasive technique is implemented in this ad is called bandwagon effect

___________ is the management function of creating a vision for the organization and guiding, training, coaching, and motivating employees to help achieve the goals and objectives of the organization. A) Controlling B) Officiating C) Organizing D) Leading

Answers

Answer:

The correct answer is letter "D": Leading.

Explanation:

Leading implies setting the example among the subordinates so the leader's work influence provides power without the need for enforcement. Leaders do not only cover the managerial duty of organizing a firm but they are involved in the development of the subordinates which is likely to increase their efficiency and the organization's productivity.

Sometimes very high ________ costs are recognized before a project begins and reducing these costs through shorter project durations becomes a high priority.

Answers

Answer:

D) overhead

Explanation:

Overhead costs are the fixed costs or indirect costs or a project. This means that they are not directly related to the production process or the delivery process. Overhead costs are divided into:

  • manufacturing: machinery and equipment, supervisors' salaries, utilities, etc.
  • administrative: rent, advertisement, equipment, etc.  

Depending on the project's scope and required tasks, projects can be crashed to reduce both direct and indirect (overhead) costs. Shorter project schedules can result in lower overhead costs, even if the direct costs are not affected, e.g. less rent, less supervisors, shorter equipment leasing times, etc.

Answer:

Overhead costs

Explanation:

When high overhead costs are recognised before project starts there will be a need to manage them. Since overhead cost increase as duration of project increases, reduction in project duration will go a long way in reducing cost incurred.

Overhead costs can include wages, rent, utility bills, maintenance costs and so on. They can also be reduced when costs that are not adding value is recognised.

Before starting a business, many people find it useful to describe the way the company will operate in which of the following?A. Shares of stock
B. Its advertisements
C. Partnership contracts
D. A business plan

Answers

D. A business plan. Having a business plan is very important because that's where you talk about all the actions you are going to take in order to create your company or business. It's where you describe your goals, your marketing strategy, and everything related to the functioning of your business.
the answer is letter D.

Macroeconomics studies all of the following EXCEPT which one?A. aggregate supply and demand
B. how different markets affect one another
C. the behavior of economics on a large scale
D. why a specific consumer made a specific choice

Answers

D. why a specific consumer made a specific choice

The Lawn Service announces that it will maintain an average cost per customer of $35 per hour. Assume that costs are distributed normally. A random sample of 18 clients showed that the average cost is $32.50 per hour with a population standard deviation of $8.10. Does the data support the claim that the average hourly cost is less than $35.00? Use a significance level of 5%. 1. The alternate hypothesis is: Ha: μ=35 Ha: μ>35 Ha: μ<32.5 Ha: μ<35 2. The test statistic is: -1.65 -1.31 -2.5 1.65 3. For a significance level of 5% the null hypothesis could be rejected?: a.Noo, because the test statistic is less than the z in the table b. No, because the test statistic is greater than the z in the table c. Yes, because the test table is greater than the z in the table d.Yes, because the teststat is less than the z in the table

Answers

answer:

The null hypothesis, denoted as H0, is a statement that assumes there is no significant difference or relationship between two variables. In this case, the null hypothesis is that the average hourly cost is $35.00.

The alternate hypothesis, denoted as Ha, is a statement that contradicts the null hypothesis and suggests that there is a significant difference or relationship between two variables. In this case, the alternate hypothesis is that the average hourly cost is less than $35.00.

To determine if the data supports the claim that the average hourly cost is less than $35.00, we need to perform a hypothesis test. The test statistic used for this type of hypothesis test is the z-score.

The formula for calculating the z-score is:

z = (x - μ) / (σ / √n)

Where:

x is the sample mean (in this case, $32.50)

μ is the population mean (in this case, $35.00)

σ is the population standard deviation (in this case, $8.10)

n is the sample size (in this case, 18)

Calculating the z-score:

z = (32.50 - 35.00) / (8.10 / √18)

z = -1.50 / (8.10 / 4.2426)

z ≈ -1.50 / 1.9109

z ≈ -0.7851

The test statistic is approximately -0.7851.

Now, we need to compare the test statistic to the critical value in the z-table. Since we are testing if the average hourly cost is less than $35.00, we are performing a one-tailed test with a significance level of 5%.

Looking up the critical value in the z-table, we find that the z-value corresponding to a significance level of 5% is approximately -1.645.

Since the test statistic (-0.7851) is greater than the critical value (-1.645), we fail to reject the null hypothesis. This means that the data does not support the claim that the average hourly cost is less than $35.00 at a significance level of 5%.

To summarize:

1. The alternate hypothesis is: Ha: μ>35

2. The test statistic is: -0.7851

3. For a significance level of 5%, the null hypothesis could be rejected?: b. No, because the test statistic is greater than the z in the table.

Alli <3