Question A company earns before-tax profits of 100,000 dollars. It has agreed to contribute 10 percent of its after-tax profits to the Red Cross Relief Fund. It must pay a provincial tax of 5 percent of its profits (after the Red Cross donation) and a federal tax of 40 percent of its profit (after the donation and provincial taxes are paid). Use Cramer’s rule to determine how much the company pays in provincial taxes, federal taxes, and Red Cross donation.
Hint {Let C, P, and F represent the amounts of the charitable donation, provincial tax, and federal tax, respectively. Since after-tax profits are $100,000 – (P+F), therefore: C = 0.1 [100,000 – (P+F) ]. Use the other pieces of information given in this question to write two other equations, one for P and one for F. Now solve these equations simultaneously using Cramer’s rule.}