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[Solution Library] Bonus and taxes. A company has an income of $100,000 before paying taxes and a bonus. The bonus B is to be 20% of the income after deducting

Question: Bonus and taxes.

A company has an income of $100,000 before paying taxes and a bonus. The bonus B is to be 20% of the income after deducting income taxes T but before deducting the bonus. So

Because the bonus is a deductible expense, the amount of income tax T at a 40% rate is 40% of the income after deducting the bonus. So

  1. Use the accompanying graph to estimate the values of T and B that satisfy both equations.
  2. Solve the system algebraically to find the bonus and the amount of tax.

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