Answers
Answer:
See Explanation
Explanation:
Given
The histogram
Required
The class width
The question is poorly formatted, as the histogram cannot be read. So, I will answer your question with the attached histogram
The class width is:
[tex]Width = Upper - Lower\ Limits[/tex]
Using the first class, as reference:
[tex]Lower\ Limits = 1[/tex]
[tex]Upper\ Limits = 4[/tex]
So, the class width is:
[tex]Width = 4 -1[/tex]
[tex]Width = 3[/tex]
Related Questions
Describe the events that occur in an efficient market in response to new information that causes the expected return to exceed the required return. What happens to the market value
Answers
Answer:
The efficient market hypothesis tells, in an equilibrium, the price of stocks or security is an unbiased estimate of the true values.
Explanation:
Thus, in the equilibrium, of security prices are neither an overvalued nor are undervalued. Suppose the investors learn new information about the company that suggests there stock is worth more than the current price. The security gets undervalued expected return exceeds the required return. Increased in demand for security from the investors with this new information will thus bid up the market value plus reduce its expected return until they are equal.Storrer Co. identifies the following activities that pertain to manufacturing overhead, for each activity, identify an appropriate cost driver.
Activity Cost Driver
Materials handling Storrer Co. identifies the following activities th Number of Purchase OrdersMachine Hours UsedNumber of SetupsSquare Footage OccupiedNumber of RequisitionsDirect Labor HoursNumber of InspectionsNumber of Parts or AssembliesNumber of Employees
Machine setups Storrer Co. identifies the following activities th Number of Purchase OrdersNumber of EmployeesNumber of SetupsNumber of InspectionsDirect Labor HoursNumber of Parts or AssembliesSquare Footage OccupiedNumber of RequisitionsMachine Hours Used
Factory machine maintenance Storrer Co. identifies the following activities th Direct Labor HoursNumber of InspectionsNumber of EmployeesNumber of RequisitionsNumber of SetupsNumber of Purchase OrdersNumber of Parts or AssembliesSquare Footage OccupiedMachine Hours Used
Factory supervision Storrer Co. identifies the following activities th Machine Hours UsedNumber of InspectionsNumber of EmployeesNumber of Parts or AssembliesNumber of Purchase OrdersNumber of RequisitionsSquare Footage OccupiedNumber of SetupsDirect Labor Hours
Quality control Storrer Co. identifies the following activities th Number of EmployeesDirect Labor HoursNumber of InspectionsSquare Footage OccupiedNumber of RequisitionsNumber of Purchase OrdersNumber of SetupsNumber of Parts or AssembliesMachine Hours Used
Answers
Answer:
Activity
1. Material Handling
2. Machine Setups
3. Factory Machine Maintenance
4. Factory Supervision
5. Quality Control
Cost Driver
1. Number of Requisitions
2. Number of Setups
3. Machine Hours Used
4. Number of Employees
5. Number of Inspections
Explanation:
The following are the activities with their cost drivers:
Activity
1. Material Handling
2. Machine Setups
3. Factory Machine Maintenance
4. Factory Supervision
5. Quality Control
Cost Driver
1. Number of Requisitions
2. Number of Setups
3. Machine Hours Used
4. Number of Employees
5. Number of Inspections
Botosan Factory has budgeted factory overhead for the year at $468,602, and budgeted direct labor hours for the year are 280,600. If the actual direct labor hours for the month of May are 255,300, the overhead allocated for May is
Answers
Answer:
$426,351
Explanation:
Calculation to determine what the overhead allocated for May is
Using this formula
Overhead allocated for May=(Estimated overhead/Estimated total DLHs)*Overhead rate per DLHs
Let plug in the formula
Overhead allocated for May=($468,602/ 280,600)*255,300
Overhead allocated for May=$1.67*255,300
Overhead allocated for May=$426,351
Therefore the overhead allocated for May is $426,351
Sheridan Industries reported actual sales of $2,125,000 and fixed costs of $562,275. The contribution margin ratio is 30%. Compute the margin of safety in dollars and the margin of safety ratio. (Round margin of safety ratio to 1 decimal place, e.g. 52.7.)
Answers
Answer:
Margin of safety $250,750
Margin of safety ratio 11.8%
Explanation:
Computation for the margin of safety in dollars and the margin of safety ratio
First step is calculate the Break even point in dollars
Break even point in dollars = Fixed costs / Contribution margin ratio
Break even point in dollars=$562,275/0.30
Break even point in dollars = $1,874,250
Now let determine the the margin of safety in dollars and the margin of safety ratio
Margin of safety = Actual Sales - Break even sales
Margin of safety= $2,125,000 -$1,874,250
Margin of safety=$250,750
Margin of safety ratio= Margin of safety/Actual Sales
Margin of safety ratio = $250,750/$2,125,000
Margin of safety ratio = 0.118*100
Margin of safety ratio = 11.8%
Thereforethe margin of safety in dollars and the margin of safety ratio will be:
Margin of safety $250,750
Margin of safety ratio 11.8%
Labor data for making one gallon of finished product in Bing Company are as follows. (1) Price—hourly wage rate $16.70, payroll taxes $0.60, and fringe benefits $1.40. (2) Quantity—actual production time 1.60 hours, rest periods and cleanup 0.30 hours, and setup and downtime 0.20 hours. Compute the following. (Round answers to 2 decimal places, e.g. 1.25.)
(a) Standard direct labor rate per hour. $ ______
(b) Standard direct labor hours per gallon. hours
(c) Standard labor cost per gallon. $______
Answers
Answer:
a. Standard direct labor rate per hour = Hourly wage rate + Payroll taxes + Fringe benefits
Standard direct labor rate per hour = $16.70 + $0.60 + $1.40
Standard direct labor rate per hour = $18.70
b. Standard direct labor hours per gallon = Actual production time + Rest periods and cleanup + Setup and downtime
Standard direct labor hours per gallon = 1.60 hours + 0.30 hours + 0.20 hours
Standard direct labor hours per gallon = 2.1 hours
c. Standard labor cost per gallon = Standard direct hours per gallon * Standard direct labor rate per hour
Standard labor cost per gallon = 2.1 hours * $18.70
Standard labor cost per gallon = $39.27
You own a portfolio that is invested 15 percent in Stock X, 35 percent in Stock Y, and 50 percent in Stock Z. The expected returns on these three stocks are 9 percent, 15 percent, and 12 percent, respectively. What is the expected return on the portfolio
Answers
Answer:
12.60%
Explanation:
The expected return on the portfolio is the sum of the weighted expected return of each stock in the portfolio
(0.15 x 9) + (0.35 x 15) + (0.5 x 12)
= 1.35 + 5.25 + 6
= 12.6%
If there are 360 million people living in the U.S, but 1 million died of health issues leaving 289 million eligible workers, what is the unemployment rate if 170 million are in the labor force and 7 million are actively seeking work?
Answers
Answer: 4.12%
Explanation:
Unemployment rate only includes people who are actively looking for work and no discouraged workers or those who have retired:
Unemployment rate = Number of unemployed looking for work / Labor force
= 7,000,000 / 170,000,000
= 4.12%
Variable Overhead Spending and Efficiency Variances, Columnar and Formula Approaches Rath Company provided the following information:
Standard variable overhead rate (SVOR) per direct labor hour $3.75
Actual variable overhead costs $222,816
Actual direct labor hours worked (AH) 57,200
Actual production in units 15,000
Standard hours (SH) allowed for actual units produced 60,000
Required:
Using the columnar approach, calculate the variable overhead spending and efficiency variances.
Answers
Answer and Explanation:
The computation of the variable overhead spending and efficiency variances is given below:
Actual VOH AH ×SVOR SH × SVOR
222816 57200 × 3.75 = 214500 60000 × 3.75 = 225000
8316 10500
Hence, 8316 is unfavorable
And, 10,500 should be favorable
On its December 31, 2017, balance sheet, Calgary Industries reports equipment of $470,000 and accumulated depreciation of $94,000. During 2018, the company plans to purchase additional equipment costing $100,000 and expects depreciation expense of $40,000. Additionally, it plans to dispose of equipment that originally cost $52,000 and had accumulated depreciation of $7,600. The balances for equipment and accumulated depreciation, respectively, on the December 31, 2018 budgeted balance sheet are:
Answers
Answer:
The cost balance on 31 December 2018 is $518,000 while that of accumulated depreciation is $126,400
Explanation:
The balance of fixed assets is computed as
Opening balance - accumulated depreciation - depreciation + Addition - Disposal
Hence given that on December 31, 2017, Calgary Industries reports equipment of $470,000 and accumulated depreciation of $94,000. During 2018, the company plans to purchase additional equipment costing $100,000 and expects depreciation expense of $40,000, Additionally, it plans to dispose of equipment that originally cost $52,000 and had accumulated depreciation of $7,600 the balance then
= $470,000 + $100,000 - $52,000
= $518,000
The accumulated depreciation
= $94,000 + $40,000 - $7,600
= $126,400
....................................................
Answers
Answer:
....................................................:)))
Joseph managed the bookstore at a local university. He was known to mumble orders at his employees and yell at them when they made mistakes with the online ordering system. Which of the management skills below does Joseph lack? Conceptual Human relations Technical Decision making
Answers
Answer:
Human relations
Explanation:
Human relations is the ability for an individual to effectively interact with others in such a way that a productive outcome is achieved.
When a person does not have good human relations, negative traits like anger, aggression, and discord will be common.
In the given scenario Joseph will have been a better human relations manager if he patiently explained how to do things to his employees instead of shouting at them.
Fiat announces its intention to build an all-electric car plant in Belvidere, Illinois. Fiat also announces it intends to sell one million vehicles per year. It hires 3000 additional workers - enough to keep the plant operating at full capacity. Fiat also signs contracts with its unions committing to pay all of its workers at this plant for 2 full years whether or not the production at the plant reaches capacity. Is this a strong strategic commitment by Fiat?
Answers
Answer:
Yes, this is Fiat's strong strategic commitment, as a company's strategy corresponds to the set of actions that a company plans to achieve its long-term goals and objectives.
When the company then announces to stakeholders its intention to build an electric car plant in Illinois, as well as its plans to sell one million vehicles a year, hire 3,000 additional workers, and sign workers' pay contracts for 2 full years, it is assuming to its target audience a commitment to comply with their declarations, which means that the new investments and launching of new products will impact the company as a whole, its profitability, market value and competitiveness, which can then be understood. as a strong strategic commitment by Fiat.
As of December 31, Drake Inc. reported the following (in millions): Current AssetsLong-term AssetsCurrent LiabilitiesTotal Liabilities $31,967$42,737$26,132$61,491 What amount did Drake Inc. report as equity on December 31
Answers
Answer:
$13,213
Explanation:
The computation of the equity is shown below:
As we know that
Total assets = total liabilities + total stockholder equity
here
Totalassets be
= $31,967 + $42,737
= $74,707
ANd, the total liabilities is $61,491
So, the equity should be
= $74,707 - $61,491
= $13,213
Jeffrey Dean, a Master's Degree candidate at North State Central University, was awarded a $15,000 scholarship from North State Central in the current year. During the current year, he paid the following expenses: Tuition $12,000 Books 1,000 Fees 500 Room and Board 1,500 In addition, he received $6,000 for teaching two undergraduate accounting courses. What amount must be included in Dean's gross income
Answers
Answer: $7500
Explanation:
It should be noted that the gross income exclusion towards a scholarship will consist of the education related expense and the tuition only.
In this case, the income that was earned which is $6000 and the room and board expense of $1500 will be added which makes $7500. Therefore, the amount that must be included in Dean's gross income is $7500.
A production process has six subsequent stages, each with their own specific resources and performing crucial tasks. Four of these stages have a capacity of 20 units per hour, while the other two stages have a capacity of 10 units per hour. What is the best conclusion?
Answers
Answer: Both stages with a capacity of 10 units per hour can be considered bottlenecks.
Explanation:
From the information given in the question, the best conclusion is that both stages with a capacity of 10 units per hour can be considered the bottlenecks.
It should be noted that the bottleneck in the chain of processes, is the one that has the limited capacity and this then reduces the capacity of the whole chain and slows down production.
A producer of fixed proportion goods X and Y (Q = Qx = Qy) has marginal costs and revenues of MC = 10 Q, MRX = 150 - 6 QX, MRy = 30 - 4 Qy. The producer should produce how many units?
a. Qx =9, Qy=9
b. Qx = 9, Qy = 7.5
c. Qx = 10, Qy = 10
d. Qx = 9, Qy=0
Answers
Answer:
a. Qx =9, Qy=9
Explanation:
As per the given data
Q = QX = QY
MRX = 150 - 6QX = 150 - 6Q
MRY = 30 - 4QY = 30 - 4Q
MC = 10Q
Now calculate the Marginal revenue as follow
MR = MRX + MRY
MR = 150 - 6Q + 30 - 4Q
MR = 150 + 30 - 6Q - 4Q
MR = 180 - 10Q
The Equilibrium of the producer will be
MR = MC
180 - 10Q = 10Q
180 = 10Q + 10Q
180 = 20Q
Q = 180 / 20
Q = 9
As we know
Q = Qx = QY
Hence, the value of Qx and QY is 9
Rough-cut capacity planning: Multiple Choice Looks at specific products to be run in specific factories. Determines if the MRP is feasible or not. Analyzes both labor and equipment capacity throughout the organization. Examines total capacity by measuring average factory output.
Answers
Answer: Examines total capacity by measuring average factory output
Explanation:
Rough Cut Capacity Planning refers to the long-term plan capacity planning tool which is used for negotiation of changes to the available capacity or master schedule or for the balancing the available capacity.
Rough-cut capacity planning examines the total capacity by measuring average factory output. Therefore, the correct option is D.
Klein Company issues a four-year note in exchange for a license agreement with fair value of $100,000. The contract requires payment of $27,956 at the beginning of each of the four years. The approximate effective interest rate associated with the notes payable is:_____.
a. 10%.
b. 8%.
c. 6%.
d. 7%.
Answers
Answer:
b. 8%.
Explanation:
The effective interest rate can be determined using the rate function in excel as shown below:
=rate(nper,pmt,-pv,fv,type)
nper=period of license=4 years
pmt=27956
pv=-100000(the initial value of the license)
fv=0
type=1(1 for beginning payments, 0 for end of the period payments)
=rate(4,27956,-100000,0,1)
rate=8.00%
Penn Corp. is analyzing the possible acquisition of Teller Company. Both firms have no debt. Penn believes the acquisition will increase its total aftertax annual cash flow by $2 million indefinitely. The current market value of Teller is $54 million, and that of Penn is $84 million. The appropriate discount rate for the incremental cash flows is 10 percent. Penn is trying to decide whether it should offer 45 percent of its stock or $72 million in cash to Teller’s shareholders.
a. What is the cost of each alternative? (Do not round intermediate calculations. Enter your answers in dollars, not millions of dollars, i.e. 1,234,567.)
Cash cost $
Equity cost $
b. What is the NPV of each alternative? (Do not round intermediate calculations. Enter your answers in dollars, not millions of dollars, i.e. 1,234,567.)
NPV cash $
NPV stock $
c. Which alternative should Penn choose?
Stock
Cash
Answers
Answer:
Penn Corp.
a. Cost of each alternative:
Cash cost $72 million
Equity cost $37.8 million
b) The NPV of each alternative:
NPV cash -$52 million ($20 - $72)
NPV stock $20 million ($20 - $0)
c. The alternative to choose:
Stock.
There is no cash flow with the offer of 45% of Penn's stock to the shareholders of Teller. Actually, there is no NPV with stock offer, except the administrative costs of issuing the shares to Teller's shareholders.
Explanation:
a) Data and Calculations:
After-tax annual cash flow = $2 million
Discount rate for the incremental cash flows = 10%
Present value of the perpetuity = $20 million ($2 m/10%)
Current market value of Teller = $54 million
Current market value of Penn = $84 million
Possible settlement options:
45% of stock = $37.8 million ($84 million * 45%)
Cash $72 million
Suppose a mutual fund qualifies as having moderate risk if the standard deviation of its monthly rate of return is less than 5%. A mutual-fund rating agency randomly selects 24 months and determines the rate of return for a certain fund. The standard deviation of the rate of return is computed to be 4.54%. Is there sufficient evidence to conclude that the fund has moderate risk at the α=0.05 level of significance? A normal probability plot indicates that the monthly rates of return are normally distributed. What are the correct hypotheses for this test? The null hypothesis is H0
Answers
Answer:
H0 : σ = 5
H1 : σ < 5
there is no sufficient evidence to conclude that fund has moderate risk.
Explanation:
The hypothesis :
H0 : σ = 5
H1 : σ < 5
The test statistic using the Chisquare variance test :
χ² = (n-1)*s²/σ²
The sample size, s = 4.54
The sample size, n = 24
α = 0.05
Test statistic ;
χ² = [(24 - 1) * 4.54²] / 5²
χ² = (23 * 20.6116) / 25
χ² = 18.962
The Pvalue :
df = n - 1 = 24 - 1 = 23
Pvalue(0.05, 23) = 0.7034
Since Pvalue > α ; we fail to reject the Null ;
Hence, there is no sufficient evidence to conclude that fund has moderate risk.
The following transactions took place in Boeing Business.
01.03.2021 - Purchase of goods costing Rs. 150000 from Airbus
company on credit.
05.03.2021 - Return of goods costing Rs. 30000 to Airbus
20.03.2021 - Sale of goods costing Rs. 100000 for Rs. 160000 on
credit
29.03.2021 - Payment of sales commission of Rs. 10000
02.04.2021 – Settlement of the full amount due to Airbus
What is the accounting equation which shows the net impact of the
above transactions in Boeing business as at 31.03.2021?
Assets
Liabilities
+
Equity
Answers
Answer:
1) Dr: Goods/Inventory (Asset increase) 150000
Cr: Payable (Liability increase) 150000
2) Dr: Payable (Liability decrease) 30000
Cr: Goods (Asset decrease) 30000
3) Dr: Payable (Liability decrease) 30000
Cr: Goods (Asset decrease) 30000
4) Dr: Receivables (Asset increase) 160000
Cr: Goods (Asset Decrease) 100000
Cr: Profit and loss (Equity increase) 60000
5) Dr: Commission Expense (Equity decrease) 10000
Cr: Cash (Asset Decrease) 10000
6) Dr: Payable (Liability decrease) 120000
Cr: Cash (Asset Decrease) 120000
A company buys equipment for $48,000, expects to use it for ten years, and then sell it for $6,000. Using the straight-line method, the company should report annual depreciation for the equipment of: A. $4,200. B. $8,400. C. $4,800. D. $9,600.
Answers
Answer:
A $4,200
Explanation:
Given the following information, a company buys equipment for $48,000 expects to use it for ten years, and then sell it for $6,000
We need to use the formula below
Annual depreciation = (Original cost - Salvage value) / Estimated life(years)
Annual depreciation = ($48,000 - $6,000) / 10
Annual depreciation = $4,200
A foreign company has offered to buy 85 units for a reduced sales price of $350 per unit. The marketing manager says the sale will not affect the company's regular sales. The sales manager says that this sale will require variable selling and administrative costs. The production manager reports that it would require an additional $30,000 of fixed manufacturing costs to accommodate the specifications of the buyer. If Belfry accepts the deal, how will this impact operating income? (Round any intermediate calculations to the nearest cent, and your final answer to the nearest dollar.)
Answers
Answer:
Option b is correct
Explanation:
The computation of the impact in the operating income is given below:
Sale price per unit 350
Less: variable cost per unit -94.49
Contribution margin per unit 255.51
multiplied by units 85
Total contribution margin 21718
Less fixed cost -$30,000
Increase or decrease in operating income $8,282
The variable cost should be
Manufacturing 900,000
Add: selling & admin 300,000
Total 1,200,000
Divided by no of units 127
Variable cost per unit 94.49
The straight-line depreciation method: A. reports an equal amount of depreciation expense each year. B. can be used only by small companies. C. reports a higher amount of depreciation expense in the early years of an asset's use. D. reports more depreciation expense in a year when an asset is heavily used and less in a year when the asset is hardly used at all.
Answers
Answer:
A
Explanation:
Depreciation is a method used in expensing the cost of an asset
Straight line depreciation expense = (Cost of asset - Salvage value) / useful life
The straight line depreciation method reports an equal amount of depreciation expense each year.
An example of the straight line depreciation method
cost of asset = 10,000
salvage value = 0
useful life = 5
straight line depreciation = (10,000 - 0) / 5 = 2000
depreciation expense each year would be 2000
The process of acquiring political beliefs is called political socialization.
true or false
Answers
Political socialization is the "process by which individuals learn and frequently internalize a political lens framing their perceptions of how power is arranged and how the world around them is (and should be) organized; those perceptions, in turn, shape and define individuals' definitions of who they are and how they should behave in the political and economic institutions in which they live
What is the loan amount if the interest rate is 7.5% per year and the monthly interest payment is $1,250?
Answers
Answer:
The amount of the loan was $ 13,953.48.
Explanation:
To determine what is the loan amount if the interest rate is 7.5% per year and the monthly interest payment is $ 1,250, the following calculation must be performed:
1250 x 12 = 15,000
1,075X = 15,000
X = 15,000 / 1,075
X = 13,953.48
Therefore, the amount of the loan was $ 13,953.48.
Corporation produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 46,000 units per month is as follows:
Per Unit Direct materials $45.60
Direct labor $8.70
Variable manufacturing overhead $1.70
Fixed manufacturing overhead $18.50
Variable selling & administrative expense $3.00
Fixed selling & administrative expense $14.00
The normal selling price of the product is $98.10 per unit.
An order has been received from an overseas customer for 2,600 units to be delivered this month at a special discounted price. This order would not change the total amount of the company's fixed costs. The variable selling and administrative expense would be $1.80 less per unit on this order than on normal sales.
Direct labor is a variable cost in this company.
Suppose there is not enough idle capacity to produce all of the units for the overseas customer and accepting the special order would require cutting back on production of 1,000 units for regular customers. The minimum acceptable price per unit for the special order is closest to: __________
Answers
Answer:
Ash Corporation
The minimum acceptable price per unit for the special order is closest to:
= $94.93.
Explanation:
a) Data and Calculations:
Normal production capacity per month = 46,000 units
Per Unit
Direct materials $45.60
Direct labor $8.70
Variable manufacturing overhead $1.70
Fixed manufacturing overhead $18.50
Variable selling & administrative expense $3.00
Fixed selling & administrative expense $14.00
The normal selling price of the product = $98.10 per unit.
Special order = 2,600 units
Relevant costs:
Direct materials $45.60
Direct labor $8.70
Variable manufacturing overhead $1.70
Variable selling & administrative expense $1.20
Total relevant costs per unit $57.20
Total variable cost for the special order = $148,720 ($57.20 * 2,600)
Loss sales revenue (1,000 * $98.10) 98,100
Total cost for the special order = $246,820
Minimum acceptable price per unit = $94.93 ($246,820/2,600)
Hart Corporation owns machinery with a book value of $600,000. It is estimated that the machinery will generate future cash flows of $570,000. The machinery has a fair value of $420,000. Hart should recognize a loss on impairment of
Answers
Answer: $180,000
Explanation:
An asset is said to be impaired when the future cashflows that it will bring in are less than the book value and when the fair value of the asset is also less than the book value.
Impairment loss = Book value of asset - Fair value
= 600,000 - 420,000
= $180,000
The ultimate goal of contract damages is: Multiple Choice Put the nonbreaching party where it was before the contract was formed. Return any costs incurred by the nonbreaching party. Put the nonbreaching party where it was prior to breach. Put the nonbreaching party in the best position possible. Give the nonbreaching party the benefit of its bargain.
Answers
Answer:
Give the nonbreaching party the benefit of its bargain.
Explanation:
A contract can be defined as an agreement between two or more parties (group of people) which gives rise to a mutual legal obligation or enforceable by law.
There are different types of contract in business and these includes: fixed-price contract, cost-plus contract, bilateral contract, implies contract, unilateral contract, adhesion contract, unconscionable contract, option contract, express contract, executory contract, etc.
Mutual assent is a legal term which represents an agreement by both parties to a contract. When two parties to a contract both have an understanding of the parameters, terms and conditions surrounding a contract, it ultimately implies that they are in agreement; this is generally referred to as mutual assent.
In contract law, damages can be defined as an amount of money that is paid to a claimant (innocent party) as a compensation for a breach of contractual agreement and it's based on the amount of interest he or she has vested in the contract. Thus, it covers the incurred by the nonbreaching party (claimant or innocent party) due to a breach of contract by the other party.
Hence, the ultimate goal of contract damages is to give the nonbreaching party the benefit of its bargain.
Suppose that the tax on interest income is levied on the nominal interest rate, the tax rate is 20 percent, and the real interest rate is 4 percent a year. There is no inflation.
Calculate the after-tax real interest rate and the true tax rate on interest income.
Answers
Answer:
After-tax interest rate ⇒ 3.2%True tax on interest income ⇒ 20%Explanation:
After-tax real interest rate:
= Real interest rate * (1 - tax rate)
= 4% * (1 - 20%)
= 4% * 80%
= 3.2%
True tax on interest income:
= 20%
True tax on interest income is the tax rate levied on the nominal interest rate which is 20%.
