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Russell and Charmin have current living expenses of ​$84 comma 830 a year. Estimate the present value amount of income they will need to maintain their level of living in retirement. Assume an average tax rate of 26 percent and​ a(n) 76 percent income replacement ratio.

Respuesta :

Chrisnando

Answer:

$87,122.70

Step-by-step explanation:

Given:

Income replacement ratio= 76%

Average tax rate= 26%

Current salary = $84,830

Since Rusell and Charmin present income is $84,830 and they want to estimate their retirement need with respect to current expense.

Since present income is $84,340 and they are willing to replace with 76% of the present income, the new required income will be:

New annual need = Current salary * 76%

Therefore, we have:

$84830 * 0.76 = 64,470.8

To find the present value amount of income, we have:

New annual need / ( 1 - average tax rate)

= 64470.8 / (1 - 0.26)

= $87,122.70

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