A company has an income of $100,000 before paying taxes and a bonus. The bonus B is to be 20% of the income after deducting income taxes T but before deducting the bonus. So B = 0.20(100,000 - T ). Because the bonus is a deductible expense, the amount of income tax T at a 40% rate is 40% of the income after deducting the bonus. So T = 0.40(100,000 - B).
a) Use the accompanying graph to estimate the values of T and B that satisfy both equations.
b) Solve the system algebraically to find the bonus and the amount of tax.