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2 - part a Sally puts $8,500 into a savings account that pays out 4% interest annually. Sally is a single taxpayer whose only other

2 - part a

Sally puts $8,500 into a savings account that pays out 4% interest annually. Sally is a single taxpayer whose only other income this year is $120,000 in ordinary income from her salary. However, she is not considered a high income taxpayer. (assume the tax year 2020)

Fill in the blank: The additional amount of tax Sally must pay on the interest income from the savings account is $_______.

2 - part b

Sally puts $8,500 into a savings account that pays out 4% interest annually. Sally is a single taxpayer whose only other income this year is $120,000 in ordinary income from her salary. However, she is not considered a high income taxpayer. (assume the tax year is 2020)

Fill in the blank: Ignoring your answer to part a., assume Sally payed a flat tax rate of 22% on all of the interest income (i.e., equivalent to facing the same MTR on each dollar of interest income because it does not push you into the next tax bracket). Sally's after-tax rate of return on the savings account is _____%.

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