Parker has $10,000 to invest. He wants to put his money in a one-year investment earning...

Parker has $10,000 to invest. He wants to put his money in a one-year investment earning an annual interest rate of 12%. Parker is in a 42% tax bracket.
Required:
a) Calculate the total value of Parker's investment, after-tax, at the end of the year.
b) Calculate the amount of tax Parker will pay on his investment.

Expert Solution

Parker earns interest of $ 1200 on $ 10,000 investment.

Tax on this interest is 42% which is = $ 504

After tax value of investment is 10000+1200-504 = 10,696

jeff jeffy answered 2 years ago

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