David bought a lot for $100,000 and sold it three years later for $130,000.
His tax liability on the lot was $2,500 a year for the past three years.
David also lost 2% interest on his investment each of the three years before the sale of the lot.
What was his profit after the sale ?
Take your time. The solution is below the wildlife photo.
A. $16,500
Subtract 100,000 from 130,000 to get 30,000 dollars over the purchase price.
Now multiply the tax liability of $2500 a year for three years times 3 to get the tax liability of $7500.
Next, multiply the interest lost on the investment of 2% a year times 100,000 or .02 times 3 times 100k to get a loss of $6000 or .06 times (three years at 2% interest loss) 100k equals 6000 dollars.
Add 7500 and 6000 to get 13,500 and subtract from the 30,000 over the purchase price at sale to get a profit of $16,500 after all of the deductions have been made.
Easy as Pi ......
