Answer:
The real investment value is $3,675
Explanation:
Given:
Pre-tax return = $5000
State tax rate = 4.5%
Federal tax rate = 22%
To Find:
The real investment value = ?
Solution:
The pre-tax return is simply the average annual compound (annualized) rate of return the fund has earned before accounting for any taxes.
The federal income tax is the tax levied by the United States Internal Revenue Service (IRS) on the annual earnings of individuals, corporations, trusts, and other legal entities.
Total tax = State tax rate + Federal tax rate
Total tax = 4.5% + 22%
Total tax = 26.5%
26.5 % of $5,000
=>
=>
=>
=>$1,325
Now
$5,000 - $1,325 = $3,675