A person pays income tax at the rate of 4 paise per rupee finds that a fall of interest from 4% to 3.75% diminishes his net yearly income by 48 rs. What is his capital?
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Let capital be Rs 100. So Interest on that is Rs 4.
So tax on interest is 4% ie. Rs 0.16 .. Net income: Rs 103.84
Now a fall in the rate of interest occurs.
So interest now: Rs 3.75. Tax on interest: 4% ie. Rs 0.15
Net income: Rs 103.60
Loss in net yearly income = Rs 0.24
So for Rs 100 capital, loss is Rs 0.24
The for a loss of Rs 48, the capital will be :
48*100/0.24
= Rs 20,000
So tax on interest is 4% ie. Rs 0.16 .. Net income: Rs 103.84
Now a fall in the rate of interest occurs.
So interest now: Rs 3.75. Tax on interest: 4% ie. Rs 0.15
Net income: Rs 103.60
Loss in net yearly income = Rs 0.24
So for Rs 100 capital, loss is Rs 0.24
The for a loss of Rs 48, the capital will be :
48*100/0.24
= Rs 20,000
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