Question
In: Finance
John earned $84 on $1200 invested in a high yield money market account. He is taxed...
John earned $84 on $1200 invested in a high yield money market
account. He is taxed at 22% of his earnings. What is the after-tax
yield on his investment?
Solutions
Expert Solution
John earned $84 on $1200 invested in a high yield money market account. He is taxed at 22% of his earnings. What is the after-tax yield on his investment?
Answer: 5.46%
Working
Formula for calculating after-tax yield on his investment is as follows
After-tax yield on his investment = (Earnings after tax ÷ Investment) * 100
= ($65.52 ÷ $1,200) * 100
= 5.46%
Where,
Earnings after tax = Earing before tax * (1 – Tax rate)
= $84 * (1 – 22%)
=$65.52
Investment = $1,200 (provided in the question)
Tax rate = 22% (provided in the question)
Earning before tax = $84 (provided in the question)
jeff jeffy answered 2 years agoRelated Solutions
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