The answer will be D to this question
Answer:
a. Elaine’s AGI is $92,750.
- $2,000 + (25% x $1,820) = $2,455
b. Elaine’s AGI is $164,500.
- $2,455 - (5 x $125) = $1,830
c. Elaine’s AGI is $211,000.
Explanation:
During 2018, the American Opportunity Credit for married taxpayers filing jointly started to phase out when their AGI was over $160,000. Once the AGI reached $180,000, the credit phased out completely.
The AOC covered 100% of the first $2,000 in qualified expenses and then up to 25% of the next $2,000. The maximum amount = $2,000 + (25% x $2,000) = $2,500
Percentage of interest at which the money is invested = 5%
Time for which the money is invested = 3 years
The final amount after 3 years = $820
Let us assume the principal amount = x dollars
Then
820 = x (1 + 0.5)^3
820 = x(1.05)^3
x = 820/(1.05)^3
= 708.35 dollars
From the above deduction, we can conclude that the principal amount invested was $708.35.
