Question

Bailey has $8,000 to invest. She has a 25% marginal tax rate.She is planning to reinvest her dividends and leave the investment in place for three years. If she can invest the money in taxable securities that earn qualified dividends with a 6% rate of return before tax, how much will she have at the end of the third year?

Answer 1

$9,287

Step-by-step explanation:

Answer 2

$9,287

Step-by-step explanation:

Remember qualified dividends are taxed at 15%

6% x (1 -0.15) =

0.06 × 0.85 = 0.051 = 5.1%

$8,000 x (1+0.051)3

= $9,287.