Question

Annie invested in a set of stocks and made $4,000 in profit. She has learned that she will have to pay taxes on the profit she has made. Here are the tax rates affecting Annie’s investment: State tax: 5% Federal tax: 25% Annie must pay in taxes to the state government on her investment. She also must pay in taxes to the federal government. As a result of the money she will lose to taxes, the real value of Annie’s profit is

Answer 1

State tax is 5%, so 0,05
0,05•4000=200$

Federal tax is 25% so 0,25
0,25•4000=1000$

Total of taxes to pay =1000+200=1200$

So the real profit will be
4000-1200=3800$

The real value of Annie's profit is 3800$

Answer 2

To solve:

State tax is 5% - you need to first find how much of the $4,000 goes to state tax: $4,000 x 5% = $200

Next find the Federal tax of 25% - $4,000 x 25% = $1,000

Next add the two tax amounts that are being taken out of Annie's paycheck together: $1,000 + $200 = $1,200

Finally, subtract the tax amount of $1,200 from $4,000 = $2,800

The real value of Annie's profit is $2,800 due to the amount of taxes taken out of her paycheck.