Your after-tax real return will be "7 %".
Given values are:
House's cost price = $200,000
House's selling price = $230,000
Tax on capital gain = 20%
then,
Profit on selling house will be:
= [tex]230000-200000[/tex]
= [tex]30000[/tex]
Now,
The tax would be:
= [tex]30000\times 20 \ percentage[/tex]
= [tex]6000[/tex]
Real profit:
= [tex]30000-6000[/tex]
= [tex]24000[/tex]
On house, the nominal rate of return will be:
= [tex][\frac{224000-200000}{200000} ]\times 100[/tex]
= [tex]12[/tex] %
Now, The inflation be:
= [tex][\frac{115.5-110}{110} ]\times 100[/tex]
= [tex]5[/tex] %
hence,
The after-tax rate of return be:
= Nominal rate of return - Inflation rate
By substituting the values, we get
= [tex]12-5[/tex]
= [tex]7[/tex] %
Thus the above answer is right.
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https://brainly.com/question/25821437
