Finance QR Project After graduating from NYCCT you landed a job earning $45,000
ID: 2806575 • Letter: F
Question
Finance QR Project After graduating from NYCCT you landed a job earning $45,000 per year. Congrats Now it's time to think about your long-term life goals. Do you want to buy a car, a house, save for retirement, and attend grad school? Based on the information below and your bi-weekly (paid every two weeks) income displayed in the pay stub below, compute the monthly costs for each scenario, and how long it would take to pay off each item. Remember that you'll also have to pay off your student loan, and will need to cover your everyday living expenses. 407507 401.16 Now Yak Toch Compary 555 Toch Ave Now York NY 10001 Earnings Statement YolkStubs.comm 2.1 GROSS YodkStubs.cous ea s12m.2a NewYorkSabsson NET PAY$127029 Question#1: Carefully review the pay stub presented above. i) What is your net income after taxes and deductions for 2016? [Hint: How many bi- weekly paychecks are left for 20162 34/ZG 65 ii) How much will you pay in taxes and deductions as a fraction of your gross income for 2016? Question #2; Create an annual budget calculation using excel assuming the following monthly expenditures
Explanation / Answer
Soln: 1a) As given that till date the amount paid = $30455.78 and for the 3 bi weeks net amount to be paid = 1270.29*3 = 3810.87. Total net amount to be paid = 30455.78 + 3810.87 = 34266.65
1b) Total tax and deductions to be paid in 2016 will be total income- net pay = $45000 - 34266.65 = 10733.35
As a fraction of gross income = 10733.35/45000 = 23.85%
3(ii) , Monthly expenses will be as follws given in the table:
Now, Total net income after these expenses = 34266.65- 23746.80 = $10519.85
4a)
In case if he want to buy a car , we are considering he needs to pay on yearly basis at 12% interest , using the PMT function we can calculate the PV value using hit & trial method
Net payment of car payment can be done = 10519.85 - 125*12 = $9019.85
When using the PMT for this value, for loan value of 37000, we get EMI = 9000 per year. So, the most expensive car that can be afforded = 37000*1.05 (down payment) = $38850
b) Now, 5000 is to be utilised for 1% interest as savings for 2 years
Total amount received after 2 years = 5000(1+r/n)nt , r = 1% , t= 2, n = 52(weekly)
A = 5000*(1+0.019%)104 = $5101
Net cumulative return = (5101 -5000)/5000 = 101/5000 = 2.02%
This return is nominal interest rate, and real interest rate will be calculated by deducting the inflation rate.
Period rent Utilities groceries clothes Misc Loan Total 12 months 9600 1800 4800 1200 4800 1546.8 23746.8Related Questions
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