HP 12c Platinum Reference Manual page 126

126 Personal Finance
11. Press t to compute the total dividends paid.
12. Press t to compute the future value when, after retirement, money is withdrawn at
a rate causing the tax rate to equal ½ the rate paid during the pay in period.
13. Press t to compute the diminished purchasing power, in terms of today's dollars,
of the future value assuming a 10% annual inflation rate.
14. Press t to compute the future value of an ordinary tax investment.
15. Press t to compute the diminished purchasing power of the ordinary tax
investment.
Example: Assuming a 35 year investment period with a dividend rate of 8.175% and an
income tax rate of 40%:
1. If you invest $1500 each year in a tax free account, what will its value be at
retirement?
2. How much cash will be paid in?
3. What will be the value of the earned dividends?
4. After retirement, if you withdraw cash form the account at a rate such that it will be
taxed at a rate equal to one-half the rate paid during the pay-in period, what will be
the after-tax value?
5. What is the diminished purchasing power of that amount, in today's dollars, assuming
10% annual inflation?
6. If you invest the same amount ($1500 after taxes for a non-Keogh or non-IRA
account) each year with dividends taxed as ordinary income, what will be the total
tax-paid cash at retirement?
7. What is the purchasing power of that figure in terms of today's dollars?
12c platinum / 12C
RPN Keystrokes
fCLEARH
g×
40?1
20?2
10?3
35n
8.175¼
1500ÞP
M
t
t
t
t
t
t
12c platinum
ALG Keystrokes
fCLEARH
g×
40?1
20?2
10?3
35n
8.175¼
1500ÞP
M
t
t
t
t
t
t
Display
Dividend tax rate.
40.00
Withdrawal tax rate.
20.00
Inflation rate.
10.00
Years to retirement.
35.00
Dividend rate.
8.18
Annual payment.
-1,500.00
290,730.34 Future value at retirement.
-52,500.00 Cash paid in.
238,230.34 Earned dividends (untaxed).
232,584.27 After-tax value.
Diminished purchasing power.
8,276.30
139,360.09 Tax-paid cash at retirement.
Purchasing power of tax-paid
4,959.00
cash at retirement.
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