Final answer:
Investing in non-dividend paying stocks for capital appreciation as a tax planning strategy can be advantageous because capital gains are often taxed at a lower rate than income, impacting the present discounted value of the investment.
Step-by-step explanation:
Opting to invest in non-dividend paying stocks that are expected to appreciate yearly by 5% as opposed to investing in 5% corporate bonds is an example of tax planning strategy focused on capital growth over immediate income.
When you invest in stocks that do not pay dividends but are expected to grow in value over time, you are betting on capital gains that are only realized when you sell the stock.
This can have tax advantages because in many jurisdictions, long-term capital gains are taxed at a lower rate than ordinary income, including dividend income.
Moreover, the implementation of tax strategies like this is crucial for enhancing the present discounted value of investments.