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 (net) income. You saved 5 months' worth in an emergency fundplacing 75% in a 60- day CD at a 5.25% APR and the rest in a regular savings account at a 3.8% APRHow much is the total Interest earned between both accounts in 60 days?
First, we need to determine your monthly net income by subtracting all the deductions:
FICA deduction: 4,520 * 7.65% = $345.78
Federal tax withholding: 4,520 * 11.75% = $531.35
State tax withholding: 4,520 * 8.5% = $383.70
Total deductions: 345.78 + 531.35 + 383.70 = $1,260.83
Now subtract the deductions from your gross income to find your net income:
4,520 - 1,260.83 = $3,259.17 (monthly net income)
Next, find your fixed expenses:
Fixed expenses = 30% * 3,259.17 = $977.75
Next, we need to determine the emergency fund savings amount:
5 months' worth in an emergency fund = 5 * (3,259.17 - 977.75) = 5 * 2,281.42 = $11,407.10
Now, split the emergency savings into the two accounts:
60-day CD: 11,407.10 * 75% = $8,555.33
Regular savings account: 11,407.10 * 25% = $2,851.77
Now we'll calculate the interest earned in each account for 60 days.
For the 60-day CD:
Interest = Principal * (Rate / 365 * Time)
Interest = 8,555.33 * (5.25% / 365 * 60)
Interest = 8,555.33 * (0.0525 / 365 * 60)
Interest = 8,555.33 * 0.008630137
Interest ≈ $73.79
For the regular savings account:
Interest = Principal * (Rate / 365 * Time)
Interest = 2,851.77 * (3.8% / 365 * 60)
Interest = 2,851.77 * (0.038 / 365 * 60)
Interest = 2,851.77 * 0.006246575
Interest ≈ $17.82
Finally, add the interest earned in the two accounts together:
Total Interest earned = 73.79 + 17.82 = $91.61
The total interest earned between both accounts in 60 days is approximately $91.61.
To calculate the total interest earned in the 60-day period, we first need to determine the amount of money invested in each account.
1. Calculate the net income after deductions:
Gross income = $4,520.00/month
FICA deduction (7.65%) = $4,520.00 * 0.0765 = $346.38
Federal tax withholding (11.75%) = $4,520.00 * 0.1175 = $531.40
State tax withholding (8.5%) = $4,520.00 * 0.085 = $384.20
Net income = Gross income - FICA - Federal tax withholding - State tax withholding
Net income = $4,520.00 - $346.38 - $531.40 - $384.20 = $3,257.02
2. Calculate the fixed expenses:
Fixed expenses = 30% * Net income
Fixed expenses = 0.30 * $3,257.02 = $977.10
3. Calculate the amount saved in the emergency fund:
Emergency fund savings = 5 months * Fixed expenses
Emergency fund savings = 5 * $977.10 = $4,885.50
4. Calculate the amount invested in the 60-day CD:
Amount invested in CD = 75% * Emergency fund savings
Amount invested in CD = 0.75 * $4,885.50 = $3,664.12
5. Calculate the amount invested in the regular savings account:
Amount invested in regular savings = (100% - 75%) * Emergency fund savings
Amount invested in regular savings = 0.25 * $4,885.50 = $1,221.38
6. Calculate the interest earned in the CD:
CD interest = Amount invested in CD * APR * (60 / 365)
CD interest = $3,664.12 * 0.0525 * (60 / 365) = $30.17
7. Calculate the interest earned in the regular savings account:
Regular savings interest = Amount invested in regular savings * APR * (60 / 365)
Regular savings interest = $1,221.38 * 0.038 * (60 / 365) = $3.35
8. Calculate the total interest earned in both accounts:
Total interest earned = CD interest + Regular savings interest
Total interest earned = $30.17 + $3.35 = $33.52
Therefore, the total interest earned between both accounts in the 60-day period is $33.52.
To find the total interest earned between both accounts in 60 days, we need to follow these steps:
Step 1: Calculate the net income by deducting the deductions from the gross income.
Net Income = Gross Income - Deductions (FICA + Federal Tax Withholding + State Tax Withholding)
FICA deduction = 7.65% of gross income
Federal Tax Withholding deduction = 11.75% of gross income
State Tax Withholding deduction = 8.5% of gross income
FICA Deduction = 0.0765 * 4520.00
Federal Tax Withholding Deduction = 0.1175 * 4520.00
State Tax Withholding Deduction = 0.085 * 4520.00
Net Income = 4520.00 - (FICA Deduction + Federal Tax Withholding Deduction + State Tax Withholding Deduction)
Step 2: Calculate the fixed expenses.
Fixed Expenses = 30% of Net Income
Fixed Expenses = 0.30 * Net Income
Step 3: Calculate the amount saved in the emergency fund.
Amount Saved in Emergency Fund = 5 * Fixed Expenses
Step 4: Calculate the amount placed in the 60-day CD.
Amount placed in CD = 75% of (Fixed Expenses - Amount Saved in Emergency Fund)
Amount placed in CD = 0.75 * (Fixed Expenses - Amount Saved in Emergency Fund)
Step 5: Calculate the interest earned on the CD.
Interest Earned on CD = (Amount placed in CD * APR * Days) / 365
The APR given is 5.25%, and the period is 60 days.
Step 6: Calculate the amount placed in the regular savings account.
Amount placed in Regular Savings Account = Fixed Expenses - Amount Saved in Emergency Fund - Amount placed in CD
Step 7: Calculate the interest earned on the regular savings account.
Interest Earned on Regular Savings Account = (Amount placed in Regular Savings Account * APR * Days) / 365
The APR given is 3.8%, and the period is 60 days.
Step 8: Calculate the total interest earned.
Total Interest Earned = Interest Earned on CD + Interest Earned on Regular Savings Account
By plugging in the values from the given information into the respective formulas, you can find the total interest earned between both accounts in 60 days.