I could really use some help with this problem.
Joe bought 100 shares of stock at $10.00 per share. When the shares increased to a value of $N each, he made a charitable donation of all the shares to the Euclid Foundation. He received a tax refund of 60% on the total value of his donation. However, he had to pay a tax of 20% on the increase in the value of the stock. Determine the value of N if the difference between his tax refund and the tax paid was $1000.
The main reason for giving appreciated stock to a charity is to avoid paying any capital gains tax on the stock.
but anyway
paid 100 * 10 = 1,000 for stock
it was worth 100 N when granted
got a refund of .6(100 N) = 60 N
paid tax = .2(100 N - 1,000)
so
60 N - (20 N - 200) = 1,000
40 N = 800
N = 20 It doubled
five years after buying 100 shares of XYZ stock for 50$ per share, you sell the stock for 7700
Consider a home mortgage of $225000 at a fixed APR of 15% for 15 years
To determine the value of N, let's break down the problem step by step:
Step 1: Calculate the initial cost of the shares
Joe bought 100 shares at $10.00 per share, so the initial cost of the shares is 100 * $10.00 = $1000.
Step 2: Calculate the total value of the donated shares
The total value of the donated shares is 100 * N.
Step 3: Calculate the total increase in the value of the stock
The increase in value is the total value of the donated shares minus the initial cost, which is (100 * N) - $1000.
Step 4: Calculate the tax paid on the increase in stock value
The tax paid on the increase in stock value is 20% of the increase, which is 0.20 * ((100 * N) - $1000).
Step 5: Calculate the tax refund on the total value of the donation
The tax refund is 60% of the total value of the donated shares, which is 0.60 * 100 * N.
Step 6: Set up the equation
According to the problem, the difference between the tax refund and the tax paid is $1000. Therefore, we have the equation:
0.60 * 100 * N - 0.20 * ((100 * N) - $1000) = $1000
Step 7: Solve the equation for N
Now, let's solve the equation to find the value of N.
0.60 * 100 * N - 0.20 * (100 * N - $1000) = $1000
60 * N - 0.20 * (100 * N - $1000) = $1000
60 * N - 20 * (100 * N - $1000) = $1000
60 * N - 20 * 100 * N + 20 * $1000 = $1000
60 * N - 2000 * N + 20000 = $1000
-1940 * N + 20000 = $1000
-1940 * N = $1000 - $20000
-1940 * N = -$19000
N = -$19000 / -1940
N ≈ 9.8
Therefore, the value of N (the increase in the value of each share) is approximately $9.80.