Question

Eve earns $68,000 per year as a lecturer. Each year, she spends $36,000. In addition, she gives $1,000 to charity and pays $16,000 in taxes. Of the money she has left, she saves $13,000 and invests $2,000 in the stock market. Calculate her personal savings rate. Round to the nearest whole percentage point.

Answer 1

Her personal savings rate is 25%

Step-by-step explanation:

The formula to compute the personal saving rate is shown below:

= (Earning amount ÷ Net income amount)

where,

Earning amount or saving amount is $68,000

And, the net income or current income equal to

= Earnings - taxes

= $68,000 - $16,000

= $52,000

Now put these values to the above formula

So, the value would equal to

= $13,000 ÷ $52,000

= 0.25 or 25%