i am having difficulty understanding the logic behind the example where deferred capital gain is incorporated to calculate return after realized taxes.

i understand the portfolio will grow at the return after realized taxes. then the effective capital gain taxes will apply to the gain. to quote exactly from the example in Schweser notes,

100,000 will grow at 8.67% ( return after realized taxes) for 8 years and become - 194,481.1

Cost basis is 75,000. so gain is 194,481.1-75,000 = 119,481.1. Effective capital gain tax @8.07% will give tax of 10,394.85. so portfolio value post tax is 109,086.2+75000= 184086.2

Answer is 181,855 !!

spent an hour in morning, couldnt get what i am missing !

I came across this example this morning. if you’re reading Schweser, I’m not sure how you spent an hour to not understand it… The formula is literally in the example:

FVIF = [(1+Rart)^N(1-Tecg)+Tecg-(1-b) Tcg]

This returns: 100,000 [(1+.0867)^8(1-.0807)+.0807-(1-.75) .2] This is the information you ommitted in your question