Answer:
$4,764.064
Step-by-step explanation:
As provided:
Error amount not paid = $4,000
Interest 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
