Question

Diana invests $25000 in a bank at the beginning of the year.She will receive 7% interest at the end of the year, but she will have to pay a 16% tax on the interest received. A) How much interest will Diana earn after sh pays the tax? B) what percent of Diana's investment is the interest after paying the tax.

Answer 1

Answer: The interest earned by Diana earn after she pays the tax=$1295

5.18% of Diana's investment is the interest after paying the tax.

Explanation:

Given: The total amount invested by Dianna= $25000

Also, she will receive 7% interest at the end of the year.

The amount she received at the end of the year=
`7\%\ of\ 25000`

⇒ The interest amount she received at the end of the year=
`0.07*25000=\$1750`

Also, she will have to pay a 16% tax on the interest received.

Now, 16% of interest =
`0.16*1750=455`

So, the interest earned by Diana earn after she pays the tax= $1750-$455=$1295

In percent, the interest after paying the tax=
`(1295)/(25000)*100=5.18\%`