4. When your tax rate remains uncha

4. When your tax rate remains unchanged, the benefit of tax deferral can be summarized in the rule, “deferral earns you ________.”a) the after-tax rate of return before taxb) the pretax rate of return after taxc) the after-tax rate of return after taxd) the pretax rate of return before taxAnswer: (b)5. From an economic perspective, professional training should be undertaken if the ________ exceeds the ________.a) future value of the benefit; present value of the costsb) present value of the benefits; future value of the costsc) future value of the benefits; future value of the costsd) present value of the benefits; future value of the costsAnswer: (d)6. Suppose you will face a tax rate of 30% before and after retirement. The interest rate is 6%. You are 35 years before your retirement date and $2,000 to a tax deferred retirement plan. If you choose to withdraw the total accumulated amount at retirement, what will you be left with after paying taxes?a) $7,532b) $10,760c) $12,298d) $15,372Answer: (b)7. Kecia is currently thirty years old and she plans to retire at age sixty. She is expected to live to age eighty-five. Her labor income is $45,000 per year and she intends to maintain a constant level of real consumption spending over the next fifty-five years. Assuming a real interest rate of 4% per year, no taxes, and no growth in real labor income, what is the value of Kecia’s human capital?a) $31,797b) $35,196c) $778,141d) $994,888Answer: (c) 8. Kecia is currently thirty years old and she plans to retire at age sixty. She is expected to live to age eighty-five. Her labor income is $45,000 per year and she intends to maintain a constant level of real consumption spending over the next fifty-five years. Assuming a real interest rate of 4% per year, no taxes, and no growth in real labor income, what is the value of Kecia’s permanent income?a) $31,797b) $35,196c) $778,141d) $994,888Answer: (b)9. Oscar is currently thirty-five year old, plans to retire at age sixty-five, and to live to age eighty-five. His labor income is $40,000 per year, and he intends to maintain a constant level of real consumption spending over the next fifty years. Assuming a real interest rate of 4% per year, no taxes, and no growth in real labor income, what is the value of Oscar’s human capital?a) $884,344b) $691,681c) $39,999d) $32,198Answer: (b)10. Oscar is currently thirty-five year old, plans to retire at age sixty-five, and to live to age eighty-five. His labor income is $40,000 per year, and he intends to maintain a constant level of real consumption spending over the next fifty years. Assuming a real interest rate of 4% per year, no taxes, and no growth in real labor income, what is the value of Oscar’s permanent income?a) $884,344b) $691,681c) $39,999d) $32,198Answer: (d)