Tax
Kelly earns $62 200 pa. What is her marginal tax rate?
32.5%
Calculate the value of a $20 000 swimming pool after 6 years with an average inflation of 2.8% per year.
$23 604.17
Vaughn invests some money in an account. He calculates how much interest he'll receive over 6 months and what his after-tax return is. Identify one assumption or limitation on the amounts he calculates.
- The interest rate stays the same
- The rest of his income doesn't impact his marginal tax rate
- Vaughn doesn't need to access any of the money during the 6 months
Josh receives $1240 interest from an investment account. His marginal tax rate is 32.5%. How much tax must he pay on the interest? And what is his after-tax return?
Tax = $403
AFR = $837
Lauren currently requires $1000 per week to maintain her lifestyle. Assuming inflation averages 2% per year, how much will Lauren require per week for her to maintain her current lifestyle in 10 years time and 20 years time.
10 years: $1218.99
20 years: $1485.95
Sarah invests $7000 in an account which pays 3.5% p.a. simple interest for 6 months. She earns $36050 pa. How much interest will Sarah earn? What is her after-tax return?
Interest earnt: $122.50
After tax return: $89.44
Barb deposited $50 000 in an account for 5 years. After the 5 years, the investment was worth $66 354.49. Calculate the real rate of return on the investment if inflation average 2.3% per year over the 5 years.
3.44% p.a.
Alfred has been saving for a holiday. He calculated how much he needed to save per fortnight to afford this holiday 4 years ago. What assumptions and limitations has he made with this calculation and how will that impact it?
- How much he will be taxed on the interest earnt will lower his savings
- The interest rate could fluctuate over the 4 years. If it went up, he would have more than he thought he needed. If it went down, he wouldn't have enough
- Inflation will likely have increased the cost of the holiday so he won't have saved enough money
- Whether he can afford to make those savings deposits and not withdraw any of the money over the 4 years. Both of these would result in him not having enough money.
Kirsty receives $50 000 in compensation for a motor vehicle accident. She decides to deposit it in an investment account for 6 months paying 5.5% pa compounding weekly. Calculate Kirsty's after-tax return if her marginal rate of tax is 0% and 19%.
0% tax = $1284.79
19% tax = $1037.44
Rory wants to save $10, 000 to purchase a car in 5 years' time. He calculates that he must make weekly deposits of $33.96 into an investment account that compounds weekly in order to reach his goal. If inflation is expected to average 2.5% per year during this period, how much extra will he need to pay per week to account for inflation?
$4.46
Greg invests $25 000 in an account which pays 4.8% p.a. interest compounded monthly for 2 years. Given that his marginal tax rate is 37%, calculate the tax he will need to pay in the first year and the second year.
1st year: 453.90
2nd year: 476.17
Ali invested $20 000 in an account for 3 years at 3.85% p.a. interest compounded monthly. Inflation over the period averaged 3.4% per year. Find the real rate of return on the investment.
0.502% p.a.
Tasha has been saving to buy a new car. She calculated 6 years ago how much she needed to save per month and adjusted for inflation. Identify a limitation or assumption that would mean she hadn't save enough after 6 years.
The interest rate went down
Inflation was higher than she expected
Wasn't able to make the required payments
Taxed on interest earnt