Question

You plan on purchasing a car in the next year. The car that you are interested in lists for $23,000 after taxes, license, and doc fees. You currently have two-thirds of the vehicles value saved and you get paid $1,312.00 twice a month. Given that monthly expenses total $1,150.12, Social Security is 6.2% of your income, Medicare is 1.45% of your income, and you pay State and Federal taxes in the amount of $53.00 and $101.35, respectively, twice a month, determine in how many months you will have to save for so that you can purchase the car without financing. Round all your answers to the nearest cent. Round your answer to the nearest month.

a.
7 months
c.
8 months
b.
6 months
d.
9 months

Answer 1

c. 8 months.

Explanation:

First let's break down all the expenses and taxes to come up with how much we save each month and subtract it to our total salary monthly.

Total Salary : $1312.00 x 2 = $2,624.00

Current Savings : 2/3 or 0.67 = $15333.33

| Expenses |

Monthly Expenses : $1,150.12

Social Security : 6.2% or 0.062 x 2,624 = $162.69

Medicare : 1.45 or 0.0145 x 2,624 = $38.05

Taxes: $53 + $101.35 = 154.35 x 2 = $308.7

So we sum up all the expenses.

= $1659.56 Total Expenses.

Now we have to find how much extra money we have each month.

= $964.44 Extra Money

Now we subtract our current savings to the total price of the car.

= -7666.67 Balance

Now we divide the total balance to our extra money monthly.

= 7.949 Months or 8 Months