Kay is trying to decide between two job offers. The compensation package for job A includes 80% of the cost of a $300-per-month health insurance plan, 90% of the cost of a $40-per-month life insurance plan, a salary of $65,000 per year, and a 5% match on 401(k) contributions. The compensation package for job B includes 70% of the cost of a $400-per-month health insurance plan, 80% of the cost of a $50-per-month life insurance plan, a salary of $64,000 per year, and a 10% match on 401(k) contributions. Kay plans to contribute $8000 per year to her 401(k) plan.
Well, Kay certainly has some interesting choices to make! It's like trying to decide between a clown car and a unicycle! Let's break it down and see which job makes the biggest clown-sized impact on her bank account.
For job A, let's calculate the cost of the health insurance plan. 80% of $300 is $240 per month. Multiply that by 12 months and we get $2,880 per year. Nice!
Now, let's move on to the life insurance plan. 90% of $40 is $36 per month. Multiply that by 12 months and we get $432 per year. Not too shabby!
Add the insurance benefits to the salary of $65,000 and we get a grand total of $68,312.
But wait, there's more! Job A offers a 5% match on 401(k) contributions. Since Kay is planning to contribute $8000 per year, the employer will match 5% of that, which is $400. Hurray for free money!
So, the total compensation for job A is $68,712.
Now, let's take a look at job B. The health insurance plan will be 70% of $400, which is $280 per month. Multiply that by 12 months and we get $3,360 per year.
As for the life insurance plan, 80% of $50 is $40 per month. Multiply that by 12 months and we get $480 per year.
Add the insurance benefits to the salary of $64,000 and we get a total of $67,840.
Job B offers a 10% match on 401(k) contributions. Since Kay is planning to contribute $8000 per year, the employer will match 10% of that, which is $800. More free money!
So, the total compensation for job B is $68,640.
Well, it looks like the clown car (job A) wins this time! It offers a higher total compensation of $68,712, compared to job B's $68,640. Kay can ride off into the sunset with her free money from the 401(k) match. Just remember, Kay, when in doubt, go for the clown car!
To compare the job offers, we need to calculate the total compensation for each job and compare the values.
Let's start with job A:
1. Health Insurance:
The cost of the health insurance plan is $300 per month. Job A covers 80% of this cost, so the amount Kay needs to pay is 20% of $300, which is $60.
2. Life Insurance:
The cost of the life insurance plan is $40 per month. Job A covers 90% of this cost, so the amount Kay needs to pay is 10% of $40, which is $4.
3. Annual Salary:
Job A offers a salary of $65,000 per year.
4. 401(k) Contributions:
Job A provides a 5% match on 401(k) contributions. Kay plans to contribute $8,000 per year, so the amount matched by the employer would be 5% of $8,000, which is $400.
Now, let's calculate the total compensation for job A:
Total compensation = Health Insurance + Life Insurance + Annual Salary + 401(k) Match
= $60 + $4 + $65,000 + $400
= $65,464
Moving on to job B:
1. Health Insurance:
The cost of the health insurance plan is $400 per month. Job B covers 70% of this cost, so the amount Kay needs to pay is 30% of $400, which is $120.
2. Life Insurance:
The cost of the life insurance plan is $50 per month. Job B covers 80% of this cost, so the amount Kay needs to pay is 20% of $50, which is $10.
3. Annual Salary:
Job B offers a salary of $64,000 per year.
4. 401(k) Contributions:
Job B provides a 10% match on 401(k) contributions. Kay plans to contribute $8,000 per year, so the amount matched by the employer would be 10% of $8,000, which is $800.
Now, let's calculate the total compensation for job B:
Total compensation = Health Insurance + Life Insurance + Annual Salary + 401(k) Match
= $120 + $10 + $64,000 + $800
= $64,930
Comparing the total compensations for job A and job B, we find that job A offers a higher total compensation:
Total compensation for job A: $65,464
Total compensation for job B: $64,930
Therefore, based on the given information, job A would be the better offer for Kay.