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 5.45% 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?
first, compute your income:
4520)(1-.0765-.1175-.085)=
then, income after expenses
Incomeabove*(1-.40)
then, emergency fund
(ncomeafterexpensesabove)*5
hten the investments
Let Cd investmetn= CD
let regular savings acct=RSA
(remember, RSA+CD=emergencyfundabove
Now we are to the math.
CD=.75*emergencyfund*
RSA=.23*emergencyfind
interest earned:
CD*.0545*2/12
RSA*.038*2/12
Note the 2/12 represents 60 days.
check all this.
4520- 7.65- 11.75- 8.5 = 3258.90 x .30 = 977.68--- 977.68 x 5 = 4888.40 ( Emergency)--- .75 x 4888.40= 3666.30 ( CD)-------- .25x4888.40= 1222.10 ( Saving Acc)
is that correct so far?Also
would I add the cd interest and the saving together?
.23? where does that come from?
@bobpursley
is it
To find the total amount of your emergency fund, you need to calculate your fixed expenses first.
Fixed expenses = Realized income * 30% = $4,520.00 * 0.30 = $1,356.00
Subtract your fixed expenses from your gross income to determine the amount available for saving:
Amount available for saving = Gross income - Fixed expenses = $4,520.00 - $1,356.00 = $3,164.00
Next, calculate how much you save per month:
Savings per month = Amount available for saving * 5 months = $3,164.00 * 5 = $15,820.00
Now, you need to divide your savings into two parts - a 60-day CD and a regular savings account. You place 75% of your savings in a CD and the remaining in a regular savings account.
CD amount = 75% of Savings per month = $15,820.00 * 0.75 = $11,865.00
Savings account amount = 25% of Savings per month = $15,820.00 * 0.25 = $3,955.00
Now, let's calculate the total interest earned between both accounts in 60 days. First, calculate the interest earned in the CD:
CD interest earned = CD amount * (CD interest rate / 365) * 60
= $11,865.00 * (5.45% / 365) * 60
= $44.92 (rounded to nearest cent)
Next, calculate the interest earned in the regular savings account:
Savings account interest earned = Savings account amount * (Savings account interest rate / 365) * 60
= $3,955.00 * (3.8% / 365) * 60
= $19.48 (rounded to nearest cent)
Finally, add the interest earned in both accounts to find the total interest earned:
Total interest earned = CD interest earned + Savings account interest earned
= $44.92 + $19.48
= $64.40
Therefore, the total amount of your emergency fund is $15,820.00, with $11,865.00 in the CD and $3,955.00 in the regular savings account. The total interest earned between both accounts in 60 days is $64.40.