Respuesta :
Answer:
After tax real rate will be 2.2 %
So option (b) will be correct answer
Explanation:
We have given nominal interest rate = 8 %
Inflation rate = 5 %
And marginal tax = 10 %
We have to find the after tax real rate interest
After tax real rate of interest is given by
After tax real rate = nominal interest rate ( 1 - tax rate ) - inflation rate
= 8 ( 1 - 0.1 ) - 5 = 8×0.9 -5 = 7.2 - 5 = 2.2 %
So option (b) will be correct answer
If a person puts money into an account that earns an 8 % nominal interest rate, then the after-tax real rate of interest would be 2.2 %.
So option (b) will be the correct answer.
What is interest?
Interest is defined as the expense from a receiver to an investor or depositor of an amount exceeding a refund of the principal sum at a particular rate.
It is the payment of money that is paid by the receiver for the use of money.
Computation of  after-tax real rate of interest:
According to the given information,
Nominal Interest Rate = 8 %
Inflation Rate = 5 %
Marginal Tax = 10 %
Now, We have to discover the after-tax real rate of interest:
[tex]\text{After Tax Real Rate of Interest}=\text{Nominal Interest Rate} \times ( 1 - \text{Tax Rate ) }- \text{Inflation Rate}\\\\\text{After Tax Real Rate of Interest}= 8\% ( 1 - 10\% ) - 5\%\\\\\text{After Tax Real Rate of Interest} = 8\% \times 0.9 -5\%\\\\\text{After Tax Real Rate of Interest}=7.2\% - 5\%\\\\\text{After Tax Real Rate of Interest}= 2.2 \%[/tex]
Therefore, the correct option is B.
Learn more about the interest, refer to:
https://brainly.com/question/4605117
