Answer:
3.75%
Explanation:
Calculation for what the after-tax savings rate of return would be
Using this formula
After-tax savings rate of return=(1.0- Saver tax bracket)*Savings account percentage
Let plug in the formula
After-tax savings rate of return =(1.0 - 0.25)*0.05
After-tax savings rate of return = 0.75*0.05
After-tax savings rate of return =0.0375*100
After-tax savings rate of return =3.75%
Therefore the After-tax savings rate of return would be 3.75 percent
A savings account earns 5 percent. If the saver is in a 25 percent tax bracket, the after-tax savings rate of return would be ____ percent
