Assuming a? 1-year, money market account investment at 4.38 percent? (APY), a 2.91% inflation? rate, a 28 percent marginal tax? bracket, and a constant ?$50, 000 ?balance, calculate the? after-tax rate of? return, the real return and the total monetary return. What are the implications of this result for cash management? decisions? Assuming a? 1-year, money market account investment at 4.38 percent? (APY), a 2.91?% inflation? rate, a 28 percent marginal tax? bracket, and a constant ?$50, 000 ?balance, calculate the? after-tax rate of? return, the real return and the total monetary return. What are the implications of this result for cash management? decisions?
Question -
What is the implication of this result for cash management? decisions?
A. The implication is that it is difficult to do any more than keep up with taxes and inflation with liquid assets.? Therefore, only the amount needed for financial emergencies and? short-term goals should be placed in assets with such a low? risk-return ratio. Additional funds should be invested elsewhere for a higher return.
B. The implication is that it is easy keep up with taxes and inflation with liquid assets.? Therefore, not only should the amount needed for financial emergencies and? short-term goals be placed in liquid cash assets but additional funds should also be invested here.
C. The implication is that it is difficult to do any more than keep up with taxes and inflation with money market account investments so these funds should be put in? higher-yielding investments like stocks and? long-term bonds.
D. No implication can be drawn from this information.