Hi,
In the EOC 7 (reading 11, 2019 curriculum), the answer provided doesn’t seem to take into account the savings caused by tax-deductibility of the contribution @ time zero. The answer simply seems to calculate that the contribution accumulates tax-free for 15 years and then it is taxed at 20%.
In my opinion, the tax deductibility @ time zero should lead to savings of $3,500 ($10,000 x 35%) since the contribution allows Aldo to pay less taxes. Thus, the answer should take this into account.
Am I missing something or is the answer provided simply wrong?