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Difficulty: EasyPersonal Income and Disposable Income

A sole proprietor in Lagos receives a total Personal Income of ₦680 million\text{₦680 million} during a given fiscal period. If direct personal income taxes paid to the government equal ₦115 million\text{₦115 million}, what is the trader's disposable income in millions of Naira?

Answer: 565 million Naira

Answer

The disposable income is 565 million Naira.
Disposable Income is defined as Personal Income minus Personal Direct Taxes. Subtracting ₦115 million from ₦680 million leaves ₦565 million available for expenditure and savings.

Step-by-Step Solution

1
Extract Personal Income and Direct Personal Taxes from the prompt.
Personal Income = ₦680 million, Direct Tax = ₦115 million.
Disposable income is calculated from gross personal earnings minus direct tax obligations.
2
Deduct direct taxation from total personal income.
565 million Naira.
Disposable income measures the income remaining after direct tax deductions, available for personal consumption and savings.

Key Concept

Calculation of Disposable Income
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Topics

Personal Income and Disposable Income

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