Pre/After Tax; Real/ Nominal; tax deferred/ non tax deferred Return

[FrankCFA]

2*2*2=8 combination
After extracting data from long long vignette…need to deal with it for required rate of return.
Any good way to avoid mistake? I hava a feeling this could be a killer in the exam…

 

[cpk123]

there has been no tax deferred / non-tax deferred up until now.
usually the 2 x 2 - pre/after, real/nominal has been the combo
be methodical, and precise. that is the only way that works.
and practice the same method on all the previous years problems from the AM exam - so you know how to build your framework.

 

[FrankCFA]

Thanks, cpk. Just double check, is below correct? Thanks.
Pre-tax real required return = (Pre-tax income needed/ Total investable assets)
After-tax real required return = (Client’s required spending need/ Total investable assets)

 

[Audacious]

yes.
ATRRR= (1-T)PTRRR