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Assume that 125,000 is invested in a TDA. What is the after-tax balance in the account after 15 years if the tax rate is 28% and the pre-tax return is 11%? 
 
 
A) 598,074.  
 
B) 430,613.  
 
C) 392,138.  
 
 
solution:B 
 
 
The balance in the account after payment of taxes in 15 years uses the future value interest factor for a TDA (FVIF,TDA): 
FVIFTDA = (1 + R)^N*(1 ? TN) 
FV = 125,000[FVIF,TDA] 
FV = 125,000[(1.11)^15*(1 ? 0.28) 
FV = 430,613 |   
 
 
 
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