If an Irish unit-linked investment of €100,000 made in 2014 is encashed fully in 2020 and is currently worth €150,000, what amount would be received into the investor's hands?

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Prepare for the QFA Investments Exam 1. Study with flashcards and multiple-choice questions with detailed explanations. Enhance your understanding and succeed on your exam!

Multiple Choice

If an Irish unit-linked investment of €100,000 made in 2014 is encashed fully in 2020 and is currently worth €150,000, what amount would be received into the investor's hands?

Explanation:
When encashing a unit-linked investment in Ireland, the tax is charged on the gain realized, not on the total value. The gain here is 150,000 minus 100,000, which equals 50,000. The tax on this gain is 41% of 50,000, i.e., 20,500. Subtracting the tax from the encashment value gives 150,000 minus 20,500 = 129,500. So the amount received by the investor would be 129,500.

When encashing a unit-linked investment in Ireland, the tax is charged on the gain realized, not on the total value. The gain here is 150,000 minus 100,000, which equals 50,000. The tax on this gain is 41% of 50,000, i.e., 20,500. Subtracting the tax from the encashment value gives 150,000 minus 20,500 = 129,500. So the amount received by the investor would be 129,500.

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