QUESTION 7 of 10:Your sole proprietorship makes 90,000 per year in profits. Your average federal tax rate is 24% and your state tax rate is 6% How much of your profits do you get to keep? a) 55,000 b) 57,500 c) 63,000 d) 65,000

To determine how much of your profits you get to keep after taxes, we need to calculate both the federal and state tax amounts and then subtract them from your total profits.<br /><br />1. **Calculate the federal tax amount:**<br /> \[<br /> \text{Federal Tax Amount} = \text{Total Profits} \times \text{Federal Tax Rate}<br /> \]<br /> \[<br /> \text{Federal Tax Amount} = \$90,000 \times 0.24 = \$21,600<br /> \]<br /><br />2. **Calculate the state tax amount:**<br /> \[<br /> \text{State Tax Amount} = \text{Total Profits} \times \text{State Tax Rate}<br /> \]<br /> \[<br /> \text{State Tax Amount} = \$90,000 \times 0.06 = \$5,400<br /> \]<br /><br />3. **Calculate the total tax amount:**<br /> \[<br /> \text{Total Tax Amount} = \text{Federal Tax Amount} + \text{State Tax Amount}<br /> \]<br /> \[<br /> \text{Total Tax Amount} = \$21,600 + \$5,400 = \$27,000<br /> \]<br /><br />4. **Calculate the amount of profits you get to keep:**<br /> \[<br /> \text{Profits Kept} = \text{Total Profits} - \text{Total Tax Amount}<br /> \]<br /> \[<br /> \text{Profits Kept} = \$90,000 - \$27,000 = \$63,000<br /> \]<br /><br />Therefore, the amount of your profits you get to keep is:<br />c) $\$63,000$