R15 : Q14 (CFAI Text, V2, P211)

Kaplan chooses to put $50,000.- in stock with expected return of 7% in the TDA (tax-deferred account) and equty (stock) returns will be raxed entirle as DCG (deferred capital gains). That is, this $50,000.- is both TDA & DCG applicable. Why the accumulated value after 20 years for this $50,000.- is calculated as TDA rather than DCG applicable ? If calculated as DCG, the accumulated value after 20 years shall be : $50,000 x [(1+0.07)^20x(1-0.2)+0.2]=$164,787 (same as Forest’s $50,000.- in Taxable Account). Anyone can help ?

Look at the chart, Kaplan chose to put stocks in the TDA account so you would have to calculate his/her accumulated value based on that decision.