Answer:
Nicholas's after-tax savings rate of return is 8.40%
Explanation:
Saving rate before tax = 11.50%
Tax Bracket applicable = 27%
After tax saving rate of return = ?
Use following formula to calculate After tax saving rate of return
After tax saving rate of return = Saving rate before tax x ( 1 - tax rate )
After tax saving rate of return = 11.50% x ( 1 - 27%)
After tax saving rate of return = 11.5% x ( 1 - 0.27 )
After tax saving rate of return = 11.5% x 0.73
After tax saving rate of return = 8.395% = 8.40% (Rounded off to 2 decimals)
So, Nicholas's after-tax savings rate of return is 8.40%
