Question

On December 30, you decide to make a $1,000 charitable donation a. If you are in the 20.5 percent federal tax bracket, how much will you save in taxes for 2016? Assume that amounts in excess of $200 do not exceed 75 percent of Net income. (Omit the $ sign in your response.) Tax savings for the current year$ b. If you deposit that tax savings in a savings account for the next five years at 8 percent, what is the future value of that account? Use Exhibit 1-A. (Round time value factor to 3 decimal places and final answer to 2 decimal places. Omit the $ sign in your response.) Future value of tax savings $Future value of five years 8% = 1.469

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Answer #1

NET INCOME IS NOT GIVEN, SO WE HAVE TO ASSUME THAT FULL AMOUNT $1000 WILL TAKEN AS DONATION AMOUNT

a. TAX SAVING = 20.5% X 1000 = 205

b . FUTURE VALUE OF TAX SAVINGS = 205 X 1.469 = 301.15 (THUMBS UP PLEASE)

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