Income before interest and tax $20,000 debt capital $100,000 interest on debt capital 5% tax rate 30% what is the amount of tax paid for the year? the amount of tax paid for the year is $ .

Answer

The amount paid for the year is $7500

Step by step explanation

Step 1: List down the given information

Income = $20,000

Other income which is the interest earned on capital amount of $100,000 = 5% of 100,000

Now find the interest earned on capital amount.

= (5/100)*100,000

= 0.05*100,000

= $5000

Step 2: Find the total income for the year.

Add $20,000 and $5,000 which is $25,000

Step 3: Find the tax amount which 30%

Tax amount = 30% of 25,000

= (30/100)*25,000

Tax amount = $7500

cash flow statement possibly

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