Comparing Return/Growth on Investments:
Donald and Gabby are going to invest some of their money for two years from January 1, 2016 to December 31, 2017. Use 2016 rates, etc for both 2016 and 2017.
Their taxable income without any return is $200,000. They will invest $55,720 for two years, leaving investment to grow for those two years.
They have a choice of:
a. Seattle Municipal bonds paying 6.25% Interest
b. Chase CD paying 11.25% Interest
c. Land that will appreciate at 6.25% per year. Property taxes will be $2,300 per year. They will rent it as pasture for $2,879 per year.
Presuming that each of the interest/growth is compounded annually.
Please Answer the two questions below:
a. Show the net return each will give in 2017 considering expenses, annual compounding of interest/appreciation, timing of income and of tax payment, and tax rates. Incorporate 2016 net income and net costs into the answers to see true net return.
b. Please order the investments with best return first.