5
QuizMultiple Choice

Financial Reserves

Question 5 • (Kapuschinsky)WCA 3424 Consumer Applications 1st nine weeks 26-27

Dylan’s essential (fixed) expenses are $900 per month, his essential (flexible) expenses are $400 per month, and his non-essential expenses are $295 per month. His 401-K retirement account has $12,000, and his emergency fund savings account has $3500. Dylan wants an emergency fund of 3 times monthly living expenses. How much more does Dylan need to save to have an adequate emergency fund?

Answer
A
$1,450
B
$5,200
C
$1,285
D
$8,500

Explanation

Add Dylan’s monthly expenses: $900 + $400 + $295 = $1,595. Three months of expenses is $1,595 × 3 = $4,785. Subtract the $3,500 already in his emergency fund: $4,785 − $3,500 = $1,285. He needs to save $1,285 more; his 401(k) is separate from his emergency fund.

AI-written and checked against the verified answer.

Previous
Next