Progressive tax A tax that takes a larger percentage from the income of highincome earners than it does from low-income individuals. The United States
income tax is considered progressive
Taxable Income Is the amount of income that is used to calculate an
. Example:
What is the future worth of $2000 if it is deposited in an account for
5 years bearing effective interest of 9%?
We know that F P (F/P,i,N)
$2000 (F/P,9,5)
II II
From Appendix B, page 698 we find that
(F/P,9,5) = 1.5386
Thus, $2000 (1.5386)
$30
- In general,
FN = P(1+i)N _
- Note that (1+i)N is known as the compound-amount factor.
Example:
A firm borrows $1000 at 8% interest compounded annually, with all payments
due at the end of 3 years. What amount must be paid?
F P(1+i)3 3
$1000 (1+0.08) -
2
(6) Series Present-Worth (Uniform Series)
From (3) above we find that:
P = A (1+1 N - 1
i(1+i) N
and g = (P/A,i,N) = (1+i)N — 1
A i(l+i) N
. EXample:
What present amount of money is equivalent to $1,500 received at the
end of each of the next 15 years ass