I don't know what is a stamp duty is can someone please help me on answering question I) & ii)
a) Lisa buys a car which has a market value of $60 000 before on-road costs. Stamp duty on the car is calculated at these rates:
• 3% of the market value to and including $45 000
• 5% of the market value over $45 000
I) calculate the stamp duty payable on the purchase of the car
ii) The car depreciates at a rate of 4.5% pa. what's is the value of the car 3 years after Lisa buys it?
Hey! You can imagine that stamp duty is a sort of 'tax' on goods. So, let's calculate it!
We know that stamp duty is calculated at 3% up to and including $45,000, and 5% after that. So, the first $45,000 of the car will be taxed like this:
Now, the car's total cost was $60,000. So, the 'rest' of the car will be taxed ABOVE the lower rate; ie. at 5%. We've already taxed the first $45,000, leaving us with the last $15,000
So, the TOTAL tax will be
Now, the car depreciates at a rate of 4.5% pa. So, after the first year, the value goes DOWN by 4.5%
After the second year, the car goes down ANOTHER 4.5%. So, we multiply the already depreciated value again!
And, then again for a third year!
There's our answer! Hope that made sense