When to use pre-tax or after-tax amount in a TEA situation? (Reading 29)

CFA Level III Portfolio Management
#1

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see above link for the question.

In schweser notes Reading 29, the blue box example on TDA vs TEA, the principle amount used to calculate the FV of TEA account is after tax of $3000 = ( $4000 x (1-0.25)).

But in the module quiz 29.4 question 2, the principle used was not tax, the solution used the full amount of 100,000 euro.

So how do we know if we should use pre tax or after tax amount when calculating FV for a TEA?

#2

I understand that in the quiz 29.4 they give the 100.000 as an input: you only have to apply the formula because the amount is after tax as an assumption.

In the Reading 29, they are giving you the 2 options: before tax and after tax. Then you should also select which amount goes to each account.

Bye

Ste