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1 No Bonds. Beginning bank acct balance is 100k. Mortgage to be paif off in 10 years. Salaries
exceeding 250k is taxed at 40%.
2 No Bonds. Beginning bank acct balance is zero to payoff part of mortgage. Salaries exceeding
250k is taxed at 40%.
3 The 100k is invested in Bond A.
4 The 100k is invested in Bond B.
Balance at age 65
3 2,021,381.76 best choice
All things equal, it is advantageous to invest in a bond whose return is greater than the cost of the mortgage, than to payoff the mortgage.
Also, Bond A looks more advantageous than Bond B since the coupons in Bond B are eaten away by the coupon taxes....
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