Question

Owen earns $75,000 gross pay. He pays roughly 30% total in federal, state, and payroll taxes. Owen takes out a long-term disability insurance policy with post-tax dollars to replace 65% of his pay. How much will Owen receive per month if he becomes disabled? Round your final answer to the nearest dollar. Do NOT include the dollar sign or comma in your answer.

Answer 1

34 125

Explanation:

To calculate how much Owen will receive per month if he becomes disabled, we need to consider the taxes and the long-term disability insurance policy.

Step 1: Calculate the amount of taxes Owen pays.

Owen's gross pay is $75,000. He pays roughly 30% in taxes, so the taxes he pays can be calculated as:

Taxes = 0.3 * $75,000 = $22,500

Step 2: Calculate Owen's net pay after taxes.

Net Pay = Gross Pay - Taxes

Net Pay = $75,000 - $22,500 = $52,500

Step 3: Calculate the amount Owen will receive from the disability insurance policy.

The disability insurance policy replaces 65% of his pay. So, the amount he will receive from the insurance can be calculated as:

Insurance Amount = 0.65 * Net Pay

Insurance Amount = 0.65 * $52,500 = $34,125

Therefore, if Owen becomes disabled, he will receive approximately $34,125 per month.