You are planning a trip to Japan in the fall. You estimate that for two weeks, you will need $5,263 (This includes airfare, room and board, daily expenses, and travel). Your gross biweekly income is $1,626 for one pay period. For each pay period, you pay 6.2% Social Security, 1.45% Medicare, $85 in state taxes, $225 in federal taxes, and $775 in regular expenses. You save for 14 consecutive, biweekly pay periods. How much will you have saved up and will you have saved enough to visit Japan for two weeks? Round all your answers to the nearest dollar.
Social Security and Medicare total 6.2% + 1.45% = 7.65% of $1,626, or about $124 per pay period. After subtracting those deductions, $85 in state taxes, $225 in federal taxes, and $775 in expenses, you can save about $417 per period. Over 14 periods, that is $417 × 14 ≈ $5,833 (using the unrounded amount). Since $5,833 exceeds the $5,263 trip cost, you will have enough. The correct choice is C, “$5,833; yes.”
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