Schweser book 3 pg. 208 q7 therefore, required, solution, believe, because

brain_wash_your

The answer says you multiply (1+ spending) * (1+ fees) * (1+inflation) then adjust with tax to get the before tax required return

I'm strongly believe schweser got it wrong because in real life inflation cannot be taxed and therefore the solution should be [ (1+spending)*(1+fees) ] / (1-tax) + inflation


Can someone clarify? Thanks

pennyless

Expenses are 100k in Year 0.

Expenses are 103k in Year 1.


Revenues have to increase 3k post tax in order to maintain real value of portfolio.

NO EXCUSES