In 2017, Carol, Who Is 54 and Single, Earned a Salary

question 23

Multiple Choice

In 2017, Carol, who is 54 and single, earned a salary of $54,000 and $6,000 of interest on State of Nevada bonds. She contributed $2,000 to her Roth IRA, paid a $4,000 hospital bill, state income taxes of $1,500, real estate taxes of $900, mortgage interest of $4,500, and $2,000 interest on her margin account under which she purchased the bonds. What is Carol's taxable income?

• A) $37,050
• B) $39,050
• C) $41,050
• D) $43,050

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Definitions:

Investment

The allocation of resources, such as capital or time, into a venture with the expectation of generating future returns.

Retained Earnings

The portion of net income that is not distributed to shareholders but instead reinvested back into the company.

Tangible Capital

Physical assets owned by a firm that are used in the production process, such as buildings, machinery, and equipment.

Opportunity Costs

The cost associated with not choosing the next best alternative in a decision-making process.