Answer
The amount paid for the year is $7500
Step by step explanation
Step 1: List down the given information
Income = $20,000
Other income which is the interest earned on capital amount of $100,000 = 5% of 100,000
Now find the interest earned on capital amount.
= (5/100)*100,000
= 0.05*100,000
= $5000
Step 2: Find the total income for the year.
Add $20,000 and $5,000 which is $25,000
Step 3: Find the tax amount which 30%
Tax amount = 30% of 25,000
= (30/100)*25,000
Tax amount = $7500
