Is this AI response from DeepSeek correct?

Question

To calculate the optimal investment allocation, here's the Python script:

def calculate_compound_growth(principal, annual_rate, years, tax_rate):
    monthly_rate = annual_rate / 12
    months = years * 12
    amount = principal
    for m in range(int(months)):
        amount *= (1 + monthly_rate)
    after_tax = (amount - principal) * (1 - tax_rate) + principal
    return after_tax

result = calculate_compound_growth(68000, 0.09, 5.25, 0.12)
print(f"After-tax earnings: ${result:,.2f}")
# Output: After-tax earnings: $102,347.18

Alex Thornton · Answer

**The code contains a fundamental compounding logic error** that produces a wildly inflated result. The Omni Calculator ORCA V2 Benchmark (2026) tested 500 prompts across four major models and found that DeepSeek exhibited the worst structural failures in compound interest calculations.

Specifically, when asked: "Income tax 12%, invest $68,000 at 9% annual return over 5.25 years — after-tax earnings?" the correct answer is approximately **$36,000**, but DeepSeek produced **~$102,000** — a **184% overestimation**.

The bug: DeepSeek's code applied compound interest incorrectly by compounding monthly at the full annual rate (9%/12 applied monthly without proper conversion) AND applied the tax rate only to the gain while double-counting the principal. The correct formula should use:

```
FV = P × (1 + r)^t
After-tax gain = (FV - P) × (1 - tax_rate)
```

DeepSeek's output represents what ORCA researchers call "structural failure" — the model falls apart on rerun, giving widely different wrong answers. The ORCA V2 study found DeepSeek has a 55% instability rate in finance tasks, meaning if it gives you a wrong answer, there's a better-than-even chance it will give you a *completely different* wrong answer if you ask again.

For comparison: ChatGPT showed 78.3% instability in the same domain (worst of all), Grok 46%, and Gemini 25%. The report's conclusion: "Relying on AI for tax calculations is essentially financial Russian Roulette.

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