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9 November, 05:59

Diana invests $25,000 in a bank at the beginning of the year. She will receive 7% interest at the end of the year, but she will have to pay a 16% tax on the interest received.

A.) How much interest will Diana earn after she pays the tax?

B.) What percent of Diana's investment is the interest after paying the tax?

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  1. 9 November, 09:47
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    A) $1470

    B) 5,88%

    Step-by-step explanation:

    B) Diana will end up with 100% - 16% = 84% of the interest she earns, so her effective interest rate is ...

    ... 7% * 84% = 5.88%

    A) Diana's investment earns ...

    ... 0.0588 * $25000 = $1470
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