Question

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. How much is the total interest earned between both accounts in 60 days? $44.31 $59.06 $41.19 $39.27

Answer 1

Gross income: $4,520.00/ mo

FICA deduction: $345.78 (4,520 x .0765)

FTW deduction: $531.1 (4,520 x .1175)

STW Deduction: $348.2 (4,520 x .085)

REALIZED INCOME: $3,258.92

Fixed income: $977.76 ( $3,258.92 x .3)

5 months fixed income: $4,888.38

CD savings Account balance: $3,666.28 ( $4,888.38 x .75)

Regular savings account balance: $1,222.1 ($4,888.38 - $3,666.28)

Formula: $ x APR% x time

Everything must be in decimal form. For this case we are looking at 60/365 days of the year, which the last parenthesis represent.

CD = ( $3,666.28)(.0525)(.164384) = $31.64

RSA = ( $1222.1)(.038)(.164384) = $7.63

$31.64 + $7.63 = $39.27