MM Mock Exam 3 AM Question 7-C

[archived_user]

If you guys have this mock, I got to 102,000/13,338,000 = .0076. How come we don’t increase this amount by inflation, THEN increase by taxes?
The answer uses .0076 as after tax real return.

 

[archived_user]

I believe that you don’t increase it for taxes because it asked for the after-tax return
I could be mistaken.

 

[archived_user]

I apologize for this dumb question, I was blind. Thank you!

 

[archived_user]

My pleasure.

 

[archived_user]

One more question on this - why don’t we subtract the current year living expenses in T-1 when calculating the end of current year portfolio value?

 

[archived_user]

Because the author naïvely assumed that the candidates would realize that the gentleman had held back enough to cover his living expenses before he deposited USD 8.5 million into his portfolio.
The updated vignette makes that position explicit.

 

[archived_user]

is there any errata pdf about this 4 mock i can get ? thanks

 

[archived_user]

I’m told that there are.
I haven’t access to them.

 

[archived_user]

S2000magician wrote:
Because the author naïvely assumed that the candidates would realize that the gentleman had held back enough to cover his living expenses before he deposited USD 8.5 million into his portfolio.
The updated vignette makes that position explicit.

Got it. Thanks!