Amber invested in a new software company that has done very well. This year, she made a $10,000 profit before taxes. Given Amber’s income, her federal tax on this investment is 20 percent, while the state tax is 5 percent. She also had to pay a $500 fee to her broker. With all of this in mind, what is the real value of the profit Amber made? Amber paid in taxes to the federal government on her investment. She also paid in taxes to the state government. After the broker’s fee is subtracted, the real value of the profit Amber made is
ANSWER IS
$2,000
$500
$7,000