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.
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?
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