Question

George had $6,000 in a savings account earning simple interest at a rate of 5% per year. At the end of the year, George paid 25% in taxes on his interest. How much money did George earn in interest that year after paying taxes?

Answer 1

$225

Explanation:

Given that:

Principal = $6,000

Interest rate = 5%

Time = 1 year

Taxes paid = 25% on the interest earned

To find:

Money earned after paying taxes ?

Solution:

First of all, let us calculate the total interest earned:

Formula for Simple Interest is given as:

`SI =(PRT)/(100)`

Where P is the principal

R is the rate of interest

T is the time taken

Putting the given values:

`SI =(6000 * 5* 1)/(100) =\$300`

Now, it is given that 25% of the interest earned is given as taxes.

Taxes paid = 25% of $300

`\Rightarrow (25)/(100) * 300 =\$75`

Therefore, the money earned = Interest earned - Taxes paid

The money earned = $300 - $75 = $225