mik82

I think you mix up a bunch of formula.

FV = (1+r)^n * (1-T) is for tax-DEFERRED account which is used both for bond and stock since the ENTIRE value of the account is taxed (here at 40% rate) at withdrawal in the future.

For taxable:

Bond is paid interest AND TAXED annually, so the AFTER Tax return is compounded annually.

Stock only appreciates the value so no tax paid annually, so at withdrawal in the future, tax is paid on the value appreciation, i.e. tax is paid on the DELTA --> tax* (Value Future - value at start).