Question

If an investor has a $5000 pre-tax return the state tax rate is 4.5% in the federal tax rate is 22% what is the real investment value

Answer 1

Answer:

The real investment value is $3,675

Step-by-step explanation:

Given:

Pre-tax return = $5000

State tax rate = 4.5%

Federal tax rate =  22%

To Find:

The real investment value = ?

Solution:

The pre-tax return is simply the average annual compound (annualized) rate of return the fund has earned before accounting for any taxes.

The federal income tax is the tax levied by the United States Internal Revenue Service (IRS) on the annual earnings of individuals, corporations, trusts, and other legal entities.

Total tax = State tax rate + Federal tax rate

Total tax = 4.5% + 22%

Total tax = 26.5%

26.5 % of $5,000

=> $26.5 \frac {1}{100} \times 5,000$

=> $\frac {26.5}{100} \times 5,000$

=>$0.265 \times 5,000$

=>$1,325

Now

$5,000 - $1,325 = $3,675