Question

An accountant for a corporation forgot to pay the firm's income tax of $725,854.37 on time. The government charged a penalty of 9.7% interest for the 48 days the money was late. Find the total amount (tax and penalty) that was paid. Assume 365 days in a year.

The total amount paid was $.

Answer 1

To calculate the total amount paid by the corporation, compute the penalty by converting days to years and applying the simple interest formula. The total amount paid was $798,618.07, including the original tax and penalty.

Step-by-step explanation:

The student needs to calculate the total amount including the original tax owed and the penalty for paying the corporate income tax late. The corporation's original income tax was $725,854.37, and the government applied a 9.7% penalty interest for late payment. To find the penalty, use the formula for simple interest: Interest = Principal × Rate × Time (in years). In this case, the time is 48 days out of 365 days in a year.

First, convert days to years: 48/365 = approximately 0.1315 years.

Next, calculate simple interest: $725,854.37 × 9.7% × 0.1315 = $72,763.70 as the penalty.

Finally, add the penalty to the original tax amount to find the total amount paid: $725,854.37 + $72,763.70 = $798,618.07.