Question

Before paying employee bonuses and state and federal taxes, a company earns profits of $103,000. The company pays employees a bonus equal to 5% of after-tax profits. State tax is 5% of profits (after bonuses are paid). Finally, federal tax is 40% of profits (after bonuses and state tax are paid). Calculate the amounts paid in bonuses, state tax and federal tax.

Answer 1

Answer:

The amounts paid in bonuses, state tax and federal tax is $ 2,855, $ 5008 and $ 38,055 respectively.

Step-by-step explanation:

This problem requires us to calculate the amounts paid in bonuses, state tax and federal tax. We can solve this problem with the help of math’s equation given below.

Let x be the amount of bonus than

x = 5% (103,000- x- 5% (103,000-x)- 40%(103,000- x- 5% (103,000-x)))

x = 0.05 (103,000 -x - 5,150 + 0.05x -41,200 + 0.4x + 2,060 - 0.02x)

x = 0.05 (58,710 - 0.57x)

x = 2,935.5 - 0.0285x

x = $ 2,855

State Tax = (103,000 -2,855)*5% = $ 5008

Federal tax = (103,000-2,855- 5,008) * 40% = $ 38,055