Question

Michael needs to pay car insurance premiums of $958 two times per year. He has decided to make deposits from each paycheck to a savings account for “Other Expenses (Predictable)” to cover this expense. How much should Michael deposit from each paycheck if the paycheck is bi-weekly?
a.
$80
b.
$74
c.
$160
d.
$37

Answer 1

Answer: b. $74

Work: Total yearly cost = 2 × $958 = $1,916. Biweekly pay = 26 paychecks/year, so per paycheck = $1,916 ÷ 26 ≈ $73.69 → $74.