Question

8. Suppose Betty saves $200 each month in her 401(k) account. How much less will her monthly take-home pay be? (Assume a combined 20% state and federal income tax rate, as in the example.)

Answer 1

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Answer:

Betty's monthly take home is $20 less

Explanation:

Betty's monthly income = $2300

Betty's monthly savings = $200

Amount left after savings = $2300 - $200

Amount left after savings = $2100

Federal and State Income tax rate = 20% = 0.2

Tax amount paid = $420

Monthly take home = $2100 - $420

Monthly take home = $1680

Compared to $150 per month savings, Betty's monthly take home is $20 less