If an investor has a $5,000 pretax return, the state tax rate is 4.5%, and the federal tax rate is 22.0%, what is the real investment value?

Respuesta :

The Real Investment Value is obtained by subtracting 22% and 4.5% of the investment value of $5.000.

22% of $5.000 is $1100.

4.5% of $5.000 is $225.

$5000 - $1325 = $3675.

Using this calculation you can reach the real investment value of $3.675.

Based on the investor's pretax return, and the federal and state tax rates, the real investment value is $3,675.

How much did the investor earn after taxes?

This can be found by the formula:

= Pretax return x (1 - state tax rate - federal tax rate)

Solving gives:

= 5,000 x (1 - 4.5% - 22%)

= 5,000 x 73.5%

= $3,675

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