Question

Patrick has successfully invested in a growing tech company. Three years ago he invested $10,000 in the company through a broker, paying an annual brokerage fee of $25. Now he has decided to sell his stock. The value of his stock is now at $17,000.
Here are the taxes and fees associated with his investment:

Annual brokerage fee: $25

State tax: 5% of profit

Federal tax: 25% of profit

Inflation rate: 1% per year over 3 years

questions:

The state tax Patrick must pay on the initial profit is

The federal tax he must pay on the initial profit is

The inflation on the amount remaining after taxes is

As a result, the real value of Patrick’s profit in whole dollars is

Answer 1

Based on Patrick's gains, tax rates, and the inflation rate, the following are true:

1. $346.25
2. $1,731.25
3. $145.43
4. $4,702.08

What taxes will Patrick pay?

State tax on initial profit is:

= (17,000 - 10,000 - 25 - 25 - 25) x 5%

= $346.25

The federal tax is:

= 25% x (17,000 - 10,000 - 25 - 25 - 25) x 25%

= $1,731.25

Inflation after taxes is:

= (17,000 - 7,000 - 25 - 25 - 25 - 346.25 - 1,731.25) * (1% + 1% + 1%)

= $145.43

Real value in profit is:

= 17,000 - 7,000 - 25 - 25 - 25 - 346.25 - 1,731.25 - 145.43

= $4,702.08

Find out more on federal taxes at brainly.com/question/12666930.

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