Determine the amount of money you have left when paying a bill with pre- and pos

Question

Determine the amount of money you have left when paying a bill with pre- and post- tax dollars. Your earnings are $50,000, the bill is $6,000 and your tax rate is 20%.

Remaining amount paying with post tax dollars =

Remaining amount paying with pre tax dollars =

Determine the amount of money you have left when paying a bill with pre- and post- tax dollars. Your earnings are $70,000, the bill is $12,000 and your tax rate is 30%.

Remaining amount paying with post tax dollars =

Remaining amount paying with pre tax dollars =

Explanation / Answer

SOLUTION for Part 1

Earning 50000, bill 6000, pre-tax 20% (0.2)

Bill 6000 and pre-tax 20% => after paying 20% tax, the bill amount is 6000 => before the tax, the bill amount = 6000/(1 – 0.2) = 6000/0.8 = 7500

=> money left = 50000 – 7500 = 42500 ANSWER

Earning 50000, bill 6000, post-tax 20% (0.2)

Bill 6000 and post-tax 20% => 20% tax is to be paid on the bill amount => total amount to be paid = 6000/(1 + 0.2) = 6000 x 1.2 = 7200

=> money left = 50000 – 7200 = 42800 ANSWER

SOLUTION for Part 2

Earning 70000, bill 12000, pre-tax 30% (0.3)

Bill 12000 and pre-tax 30% => after paying 30% tax, the bill amount is 12000 => before the tax, the bill amount = 12000/(1 – 0.3) = 12000/0.7 = 17142.86

=> money left = 70000 – 17142.86 = 52657.14 ANSWER

Earning 70000, bill 12000, post-tax 30% (0.3)

Bill 12000 and post-tax 30% => 30% tax is to be paid on the bill amount => total amount to be paid = 12000/(1 + 0.3) = 12000 x 1.3 = 15600

=> money left = 70000 – 15600 = 54400 ANSWER

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