Generate an image of an appealing financial scene with no text. Depict two people at a table: a Middle-Eastern male and a Black female, engaged in a conversation regarding financial investments. There should be visual symbols representing stock trading such as tickers, glass buildings, line graphs, pie charts and a pen & paper. on the table. The individuals are clearly in discussion, possibly reviewing the figures and shares. There are no logos or company names visible anywhere, maintaining an air of neutrality and professional discussion in the scene.

1). Kelly purchased ten shares of Gentech stock for $200 in year 1 and sold all the shares in year 2 for $220 a share. Between year 1 and year 2, the price level increased by 5%. The tax on capital gains is 50%. If the capital gains tax is on nominal gains, calculate how much tax Sally pays on her gain. Calculate Kelly's capital gains if the tax is on real gains.

2). Sally purchased one share of Stryker stock for $200 in year 1 and sold that share in year 2 for $400. The inflation rate between year 1 and year 2 was 50%. If the capital gains tax is 50%, calculate Sally's after tax real capital gain if the tax is on nominal gains? What is it if the tax is on real gains?

1) Nominal gains are 220-200 = $20, with a 50% tax rate, tax=$10 Real gains are 220 - (1.05*200) = $10, tax on real gains, if real gains is the base, is $5

2) Nominal gains are 400-200=$200, real gains are 400-1.5*200 = $100. Tax on nominal gains is $100. So after tax real capital gain is real gains less nominal tax or 100-100 = 0.
If real gains are the tax base, the tax on real gains would be $50.

The previous solution is right except that it requires to multiply everything by 10 because she purchased 10 shares

Question #1 is written poorly. If read how it is written. She purchased 10 shares for a total cost of $200. The next year she sold all 10 shares for $220 each, resulting in $2200. That leaves her with nominal gains of $2000. 50% of that is $1000.

Sam has 10 shares of a company. Based upon the company's dividend policy, Sam will receive a total of $450 per year in perpetuity. What is the value of each share if the rate of interest is 8 percent?

1). Kelly's capital gains if the tax is on nominal gains can be calculated as follows:

Nominal gains = Selling price - Purchase price
= ($220/share * 10 shares) - ($200/share * 10 shares)
= $2200 - $2000
= $200

Tax on nominal gains = Tax rate * Nominal gains
= 50% * $200
= $100

So, Kelly would pay $100 in taxes on her gain if the tax is on nominal gains.

If the tax is on real gains, we need to adjust for the increase in price level due to inflation. The real gains can be calculated as follows:

Real gains = Nominal gains - Inflation-adjusted cost basis
= ($2200 - $2000) - ($2000 * 5%)
= $200 - $100
= $100

Kelly's capital gains, taking into account the inflation-adjusted cost basis, would be $100 if the tax is on real gains.

2). If the tax is on nominal gains, Sally's after-tax real capital gain can be calculated as follows:

Nominal gains = Selling price - Purchase price
= $400 - $200
= $200

Tax on nominal gains = Tax rate * Nominal gains
= 50% * $200
= $100

The tax on nominal gains is the same as before, regardless of the inflation rate.

If the tax is on real gains, we need to adjust for the increase in price level due to inflation. The real gains can be calculated as follows:

Real gains = Nominal gains - (Inflation rate * Purchase price)
= $200 - (50% * $200)
= $200 - $100
= $100

So, Sally's after-tax real capital gain would be $100 if the tax is on real gains.

To calculate Kelly's tax on her gain, we first need to determine her nominal gain. The nominal gain is the difference between the selling price and the purchase price. Kelly purchased ten shares for $200 each, so her total purchase cost is $200 * 10 = $2000. She sold all the shares for $220 each, so her total selling price is $220 * 10 = $2200. Her nominal gain is $2200 - $2000 = $200.

Now, let's calculate the tax on her nominal gain. The tax on capital gains is 50%, so Kelly will pay 50% * $200 = $100 in taxes on her nominal gain.

To calculate Kelly's capital gains if the tax is on real gains, we need to adjust the nominal gain for inflation. The price level increased by 5% between year 1 and year 2. To account for this, we multiply the nominal gain by 1 + inflation rate. The inflation rate is 5%, so the adjustment factor is 1 + 0.05 = 1.05.

Kelly's real gain is $200 * 1.05 = $210. Therefore, Kelly's capital gains if the tax is on real gains is $210.

Moving on to Sally's scenario, if the tax is on nominal gains, we need to calculate her nominal gain first. Sally purchased one share for $200 and sold it for $400, so her nominal gain is $400 - $200 = $200.

If the tax is on nominal gains, Sally will pay a 50% tax on her nominal gain. So her tax on her nominal gain is 50% * $200 = $100.

To calculate Sally's after-tax real capital gain if the tax is on nominal gains, we need to adjust the nominal gain for inflation. The inflation rate is 50%, so the adjustment factor is 1 + 0.50 = 1.50.

Sally's real gain is $200 * 1.50 = $300. After paying the tax on her nominal gain, Sally's after-tax real capital gain is $300 - $100 = $200.

If the tax is on real gains, Sally's after-tax real capital gain remains the same at $300, as the tax is applied after adjusting for inflation.