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Country A levies an individual income tax with the following rate structure: ...

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Finance

Country A levies an individual income tax with the following rate structure:

Percentage Rate Bracket
10 % Income from 0 to $20,000
15 Income from $20,001 to $75,000
25 Income from $75,001 to $160,000
30 Income in excess of $160,000

Ms. Slatterys annual taxable income for years 1 through 5 is $106,600. Ms. Ochoas taxable income for years 1 through 4 is $12,000. In year 5, Ms. Ochoa wins a lottery, and her taxable income for this one year jumps to $485,000. Assume the tax rate bracket has not changed.

Required:

  1. How much total income does each individual earn over the 5-year period?
  2. Compute each individuals average tax rate for the 5-year period.

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