contestada


Your gross income is $4,520.00/month. Your deductions are FICA (7.65%), federal tax withholding (11.75%), and state tax withholding (8.5%). Your fixed expenses are 30% of your realized income. You saved 5 months' worth in an emergency fund, placing 75% in a 60-day CD at a 5.25% APR and the rest in a regular savings account at a 3.8% APR. What is the total amount of your emergency fund?

Respuesta :

budwilkins
1st we need to calculate the take-home net monthly income, 2nd deduct 30% expenses then × 5 mos, then last calculate the rates for emergency fund (EF).

1) $4,520.00/month - [4520 × (FICA (7.65%) + federal tax (11.75%) + state tax (8.5%))]
= 4520 - [4520 × 0.279] = 4520 - 1261.08
= 3258.92

2) less 30% expenses every month = 3258.92-(3258.92×0.30) = 3258.92×0.70 = 2281.24,
2281.24 × 5 mos = 11,406.22

3) EF = CD + savings acct
75% of 11,406.22 = 8554.67 in 60-day CD
25% × 11,406.22 = 2851.56 in savings acct

If they want to know what this EF is at a certain point in the future, that should have been asked. Otherwise the beginning total amt of the EF after saving for 5 mos = $11,406.22

Answer:

$11,406.20

Step-by-step explanation:

7.65% of 4520 is

0.0765(4520) = 345.78.  This is what is withheld for FICA.

11.75% of 4520 is

0.1175(4520) = 531.10.  This is what is withheld for federal tax.

8.5% of 4520 is

0.085(4520) = 384.20.  This is what is withheld for state tax.

This leaves 4520-(345.78+531.10+384.20) = 3258.92 for realized income.

Your fixed expenses are 30% of this; this means you keep 100-30 = 70% of your realized income.  This is

0.7(3258.92) = 2281.24.  This is the monthly amount you have after fixed expenses.

This means 5 months' worth is 5(2281.24) = 11460.20.


Otras preguntas