Answer:
Year 1: $2,150,000
Year 2: $2,291,600
Year 3: $2,260,320
Explanation:
Clifton's stock in Year 1 = $(2,400,000 - 250,000) = $2,150,000
To obtain percentage tax = (250,000 X 100%)/ 2,400,000 = 10.4% = 0.104
In year 2: Tax on $400,000 = $400,000 * 0.104 = $41,600
∴ Clifton's Stock in year 2 = $(2,150,000 + 41,600 + 100,000) = $2,291,600
In year 3: Tax on $180,00 = $180,000 * 0.104 = $18,720
∴ Clifton's stock in year 3 = $(2,291,600 + 18,720 + 300,000) = $2,260,320
