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? How much is in the CD and savings account? How much is the total interest earned between both accounts in 60 days?
Be sure to include in your response:
the answer to the original question
the mathematical steps for solving the problem demonstrating mathematical reasoning
Total amount of emergency fund:
$4,520.00 x 5 = $22,600.00
Amount in CD:
$22,600.00 x 0.75 = $16,950.00
Amount in savings account:
$22,600.00 - $16,950.00 = $5,650.00
Total interest earned in CD:
$16,950.00 x 0.0525 x (60/365) = $44.05
Total interest earned in savings account:
$5,650.00 x 0.038 x (60/365) = $37.30
Total interest earned between both accounts in 60 days:
$44.05 + $37.30 = $81.35
Therefore, the total amount of the emergency fund is $22,600.00. There is $16,950.00 in the CD and $5,650.00 in the savings account. The total interest earned between both accounts in 60 days is $81.35.