Three years ago you made a error on your federal tax return by underpaying your taxes in the amount of $4,000. The IRS charges interest and penalty of 6% per year and hae found your error. Originally you owed $4,000. Now how much do you owe the IRS?N= I/Y= PV= PMT= FV= P/Y=

Accepted Solution

Answer:$4,764.064Step-by-step explanation:As provided:Error amount not paid = $4,000Interest penalty charged by IRS per year = 6%The error was made 3 years ago, that means the penalty will be attracted for 3 years.Note: The interest charged by tax departments are compound interest but not simple interest.Therefore, total amount due at end of 3 years = [tex]Principal \times ( 1 + rate\ of\ interest)^D^u^r^a^t^i^o^n[/tex]= [tex]4,000\ \times \ (1 + 0.06)^3[/tex]= $4,000 [tex]\times[/tex] 1.191016= $4,764.064