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 in the CD?
$3,019.31


$2,612.01


$3,666.30


$2,717.88

Answer 1

Answer:

The correct answer is C. $ 3,666.30

Step-by-step explanation:

Let's calculate how much money you have in the CD after 5 months, this way:

• Gross Income = $ 4,520
• Total deductions on taxes = 27.9% (11.75 + 7.65 + 8.50) * 4,520 = $ 1,261.08
• Realized income = Gross income - Total deductions on taxes
• Realized income = 4,520 - 1,261.08
• Realized income = $ 3,258.92
• Fixed expenses = 3,258.92 * 0.3 = $ 977.68
• Emergency fund = 977.68 * 5 = $ 4,888.40
• Certificate of Deposit = 4,888.40 * 0.75 = $ 3,666.30

The correct answer is C. $ 3,666.30