Q2) Suppose the rate of profit is 20%, profit income is taxed at the rate of 30% and the rate of inflation is 5%. The real post-tax profit rate is-
a) 9%
b) 10.5%
c) -15%
solution
tax on profit= 30% of 20% = .03*.02=.06
post tax profit = .20-.06=.14
profit-inflation= actual profit= .14-.05= .09= 9%
Hence option A.. this is the ans given in answer key also.. u can verify :)
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