Expert: Chanda Walker - 1/24/2009

Question
1.Upon completion of his degree, Michael is hired as a technician at the rate of $900 every two weeks (after taxes).  His monthly bills, payable on the first of the month, are:

  Rent         $500
  Electricity          80
  Gas (heat)          65
  Car payment        300
  Car insurance              70
  Fuel for car          80
  Groceries        150
  Credit cards        200

Given Michael’s current expenses, how much money is available weekly for leisure spending?

2.Instead of spending his additional earnings each month, Michael chooses to open a savings account offering 3% interest, accrued monthly.  Calculate the amount of money Michael will have in his savings account at the end of each of the following periods.

(a)   three months
(b)   six months
(c)   one year


Answer
1.Upon completion of his degree, Michael is hired as a technician at the rate of $900 every two weeks (after taxes).  His monthly bills, payable on the first of the month, are:

Rent $500
Electricity    80
Gas (heat)    65
Car payment  300
Car insurance              70
Fuel for car    80
Groceries  150
Credit cards  200

Given Michael’s current expenses, how much money is available weekly for leisure spending?
Monthly bill total: 500+80+65+300+70+80+150+200= $1445
Monthly income:  $1800
Leisure spending: 1800-445 = $355


2.Instead of spending his additional earnings each month, Michael chooses to open a savings account offering 3% interest, accrued monthly.  Calculate the amount of money Michael will have in his savings account at the end of each of the following periods.

(a) three months
(b) six months
(c) one year

He can put $355 into his account each month.  I'll do this month by month for you.
Month   Before Interest   After interest
1   355           365.65
2   720.65           742.27
3   1097.27           1130.19
4   1485.19           1529.74
5   1884.74           1941.29
6   2296.29           2365.17
7   2720.17           2801.78
8   3156.78           3251.48
9   3606.48           3714.68
10   4069.68           4191.77
11   4546.77           4683.17
12   5038.17           5189.32

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