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kotegsom [21]
3 years ago
15

You made a $500,000 loan at 10% interest when the CPI was 120. The loan was repaid five years after that, when the CPI was 130.

Assume the tax on interest income is 20%. Calculate the tax you owe the government.
Business
1 answer:
Alona [7]3 years ago
5 0

Answer:

10000 before inflation, 10833 after inflation

Explanation:

P = 500000

1 = 10%

Interest calculated = 500000x0.1

= $50000

20%x50000 = $10000

Rate of inflation = (130-120)/120 = 0.833

0.833x100%

= 8.333%

What has to be paid to government

= 10000+(8.333*10000)

= 10833

Before inflation, you owe $10000

After inflation you owe $10833

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