[ANSWERED] Roth IRA Ver.sus Deductible IRA. Harry wants to contribute either $6,000 (BT$) ro a traditional…

Roth IRA Ver.sus Deductible IRA. Harry wants to contribute
either $6,000 (BT$) ro a traditional deductible IRA or $6,000 (AT$) ro a Roth
IRA. His current tax rate is 30% for ordinary income and 15% for capita l
gains. He expects his IRA investment to earn a 12 % BTROR, and he plans to
withdraw the IRA accumulation in 25 years, at which rime he will be over age
59½. If he contributes to a deductible IRA, he will invest the tax savings from
the deduction in a nondividend paying stock chat he expects to grow at a 12%
BTROR. Harry will sell the stock at the same rime he withdraws the IRA
accumulation.
a. Compare the two alternatives assuming that, at the time
of withdrawal, Harry’s tax rare will be 30% for ordinary income and 15% for
capital gains.
b. Compare the two alternatives assuming that, at the time
of withdrawal, Harry ‘s tax rare will be 15% for ordinary income and 0% for
capital gains.