Suppose Alex earned $500 (nominal capital gain) from selling stock he bought ten years ago. During the last ten years prices increased significantly, which means that Alex’s real capital gain is only $300. If the tax applied to capital gains is 35%,

a) calculate Alex’s real after tax capital gain if the tax is applied to his nominal capital gain.

b) calculate Alex’s real after tax capital gain if the tax is applied to his real capital gain.