ATAR Notes: Forum
VCE Stuff => VCE Mathematics => VCE Mathematics/Science/Technology => VCE Subjects + Help => VCE General & Further Mathematics => Topic started by: dshban on September 14, 2009, 08:38:06 pm
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A house which was originally purchased for $165000, was sold after 10 yrs for $245000.
Capital gains tax had to be paid on the profit, after allowing for inflation.
Assuming inflation averaged 3.8% p.a. over the 10 yrs, find the amount on which tax must be paid.
It says the answer is $5416.18 but I don't know how to get it.
Any ideas?
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Hello,
When they purchased the house, it was worth $165,000. Due to inflation, after ten years, it's value has changed alongside with inflation.
Inflation is given to you at 3.8% p.a.
You can use the forumla A = PxR^n to work out the final amount/value of the property, due to inflation, after 10 years.
A = 165,000 x (1 + (3.8/100))^10 = $239,583.82
They sold it for $245,000. The profit earned on the property is $245,000-$239,583.82 = $5,416.18
However, I always thought that C.G.T is only paid on 50% of the profit earnt, so that tax would only be paid on an amount of $2,708.09. Nonetheless, this is how they have done it I think.