Question

On january 1, pete rowe bought a ski chalet for $50,000. pete is renting the chalet for $53 per night. he estimates he can rent the chalet for 180 nights. pete’s mortgage for principal and interest is $446 per month. real estate tax on the chalet is $480 per year. pete estimates that his heating bill will run $50 per month. he expects his monthly electrical bill to be $25 per month. he pays $10 per month for cable television.

Answer 1

Pete Rowe will be able to save $22.4 of his after-tax monthly income, which is less than 10% of his income.

Step-by-step explanation:

To determine if Pete Rowe will be able to save 10% of his monthly income, we need to calculate his monthly expenses and compare them to his monthly income after taxes. First, let's calculate Pete's monthly expenses:

• Pete's mortgage for principal and interest is $446 per month
• Real estate tax on the chalet is $480 per year, which is $40 per month
• Pete's heating bill is $50 per month
• Pete's monthly electrical bill is $25
• Pete pays $10 per month for cable television
• Considering he estimates renting the chalet for 180 nights at $53 per night gives us a total of $9540 per year or $795 per month in rental income

Now, let's calculate Pete's monthly income:

• Rental income: $795
• Total monthly expenses: $446 + $40 + $50 + $25 + $10 = $571

Finally, let's calculate Pete's monthly savings:

• Monthly income after taxes: $795 - $571 = $224
• Monthly savings: 10% of $224 = $22.4

Therefore, Pete Rowe will be able to save $22.4 of his after-tax monthly income, which is less than 10% of his income.