Question

As the owner of a women's clothing store, Caroline Lipscomb has an income of $75,000. She pays $30,000 per year in taxes and another $17,000 per year in grocery bills, house mortgage, and car payment. Last year she went to Italy and spent an additional $4,000. What was Caroline's discretionary income last year?

a. 45,000
b. 75000
c.26000
d.28000
e. not enough info

Answer 1

Caroline Lipscomb's discretionary income is calculated by subtracting all her expenditures from her total income. After performing the calculations, we find that her discretionary income would be $24,000, which is not listed in the given choices.

Step-by-step explanation:

Caroline Lipscomb's discretionary income is calculated by subtracting her taxes, grocery bills, house mortgage, car payment, and additional personal expenses from her total income.

First, we calculate her total essential expenditures: Caroline pays $30,000 per year in taxes and $17,000 per year for groceries, mortgage, and car payments. When we sum these amounts, we get $47,000. Subtracting this from her total income of $75,000 gives us $28,000.

However, we must also account for her trip to Italy, which cost an additional $4,000. Therefore, her discretionary income would be $28,000 - $4,000 = $24,000. However, this amount is not listed in the answer choices, which implies there might be an error in the premises of the question or the choices presented.