pre-tax nominal rate of return instead, individual, someone, examples

AnalystForum

When you're fining the pre-tax nominal rate of return for someone in an individual IPS, I've seen examples when they take the salary or whatever and then take the taxes out and use that to find the return requirement. In other examples they don't do that, and instead they go to the end and find the return requirement and then divide that by (1-T). When do you do which?

former

Depends. If the taxes are the same for income, interest and dividends, I see no harm in saving it until the end. If tax rates are different, I'd break it out into separate components.

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IAmNeil

Income (salary) will be taxed and also investment return (capital gains and dividends/interest) will be taxed, so I think you will have to apply the appropriate tax rate both times. I am assuming salaries given are pretax.