PMT = (P(r/n))/(1 - (1 + r/n) ^ (- n * t)) Dan works as a waiter at Red Lobster and makes $8.50 hour plus an additional $200 in tips. He worked a single 12 hour shift this week. They withhold $10% $ of his pay for federal taxes and $6.2% for FICA taxes. What would Dan's net pay be?

Answer 1

To calculate Dan's net pay for the week, we first need to determine his total earnings before taxes and then apply the tax withholdings. The steps are as follows:

1. Calculate Hourly Earnings:

   • Hourly wage: $8.50
   • Hours worked: 12

   \[ \text{Total hourly earnings} = \text{Hourly wage} \times \text{Hours worked} = 8.50 \times 12 = 102 \]

2. Add Tips:

   • Tips: $200

   \[ \text{Total earnings before taxes} = \text{Hourly earnings} + \text{Tips} = 102 + 200 = 302 \]

3. Calculate Federal Tax Withholding:

   • Federal tax rate: 10%

   \[ \text{Federal tax} = \text{Total earnings} \times \text{Federal tax rate} = 302 \times 0.10 = 30.20 \]

4. Calculate FICA Tax Withholding:

   • FICA tax rate: 6.2%

   \[ \text{FICA tax} = \text{Total earnings} \times \text{FICA tax rate} = 302 \times 0.062 = 18.684 \]

5. Calculate Total Tax Withholdings:

   \[ \text{Total tax withholdings} = \text{Federal tax} + \text{FICA tax} = 30.20 + 18.684 = 48.884 \]

6. Calculate Net Pay:

   \[ \text{Net pay} = \text{Total earnings} - \text{Total tax withholdings} = 302 - 48.884 \approx 253.116 \]

Thus, Dan's net pay after taxes would be approximately $253.12.