Hello all,
I have a financial question and I hope you can help me.
Assume the following situation:
The after-tax return required to accumulate £2 million in 18 years beginning with an investable base of £1,235,000 and with annual outflows of £26,000 is 4.427 percent, which when adjusted for the 40 percent tax rate, results in a 7.38 percent pretax return (4.427%/(1 − 0.04) = 7.38%).
I understand the Tax adjustment calculation. But how do you derive the 4.427 in the first place?
I would really appreciate your help so I can understand the calculation!
Many thanks in advance!
Cheers,
Peter
I have a financial question and I hope you can help me.
Assume the following situation:
The after-tax return required to accumulate £2 million in 18 years beginning with an investable base of £1,235,000 and with annual outflows of £26,000 is 4.427 percent, which when adjusted for the 40 percent tax rate, results in a 7.38 percent pretax return (4.427%/(1 − 0.04) = 7.38%).
I understand the Tax adjustment calculation. But how do you derive the 4.427 in the first place?
I would really appreciate your help so I can understand the calculation!
Many thanks in advance!
Cheers,
Peter