### Example Problem on Housing Expense Calculation**Problem:**Abe makes $18.50 per hour. He works 37 hours a week. He pays 23% of his gross earnings in federal and state taxes and saves 5% of his monthly gross income. He is considering renting an apartment that will cost $1,500 per month.**Questions:**a. Is this monthly rental fee within the recommended 25–30% housing expense range?b. Based on his expenses, can he make the monthly payments?**Solution:****Step 1: Calculate Gross Monthly Income**- Hourly wage: $18.50- Weekly working hours: 37Weekly income = $18.50 * 37 = $684.50Monthly income (approximated by 4.33 weeks/month) = $684.50 * 4.33 ≈ $2,962.89**Step 2: Calculate Net Income**- Federal and state taxes: 23% of gross income- Savings: 5% of gross incomeTaxes = 23% of $2,962.89 ≈ $681.47Savings = 5% of $2,962.89 ≈ $148.14Remaining income after taxes and savings = $2,962.89 - $681.47 - $148.14 ≈ $2,133.28**Step 3: Calculate Housing Expense Range**- Recommended housing expense range: 25%-30% of gross income25% of $2,962.89 ≈ $740.7230% of $2,962.89 ≈ $888.87Therefore, the recommended housing expense range is approximately $740.72 to $888.87.**Step 4: Determine if Monthly Rent is Within the Range**- Abe's potential rent: $1,500 per monthSince $1,500 is not within the $740.72 to $888.87 range, the rent exceeds the recommended housing expense range.**Step 5: Check if Abe Can Make Monthly Payments**- Remaining income after taxes and savings: $2,133.28- Monthly rent: $1,500Remaining income after rent = $2,133.28 - $1,500 = $633.28Therefore, Abe can cover his rent and still have $633.28 left for other expenses

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Description: ### Example Problem on Housing Expense Calculation**Problem:**Abe makes $18.50 per hour. He works 37 hours a week. He pays 23% of his gross earnings in federal and state taxes and saves 5% of his monthly gross income. He is considering renting an ap

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4. Abe makes $18.50 per hour. He works 37 hours a week. He pays 23% of his gross earnings in federal and state taxes and saves 5% of his monthly gross income. He is considering renting an apartment that will cost $1,500 per month. a. Is this monthly rental fee within the recommended 25-30% housing expense range? b. Based on his expenses, can he make the monthly payments? Anpli

4. Abe makes $18.50 per hour. He works 37 hours a week. He pays 23% of his gross earnings in federal and state taxes and saves 5% of his monthly gross income. He is considering renting an apartment that will cost $1,500 per month. a. Is this monthly rental fee within the recommended 25-30% housing expense range? b. Based on his expenses, can he make the monthly payments? Anpli

Algebra and Trigonometry (6th Edition)

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ISBN:9780134463216

Author:Robert F. Blitzer

Publisher:Robert F. Blitzer

ChapterP: Prerequisites: Fundamental Concepts Of Algebra

Section: Chapter Questions

Problem 1MCCP: In Exercises 1-25, simplify the given expression or perform the indicated operation (and simplify,...

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### Example Problem on Housing Expense Calculation

**Problem:**
Abe makes $18.50 per hour. He works 37 hours a week. He pays 23% of his gross earnings in federal and state taxes and saves 5% of his monthly gross income. He is considering renting an apartment that will cost $1,500 per month.

**Questions:**
a. Is this monthly rental fee within the recommended 25–30% housing expense range?
b. Based on his expenses, can he make the monthly payments?

**Solution:**

**Step 1: Calculate Gross Monthly Income**
- Hourly wage: $18.50
- Weekly working hours: 37

Weekly income = $18.50 * 37 = $684.50
Monthly income (approximated by 4.33 weeks/month) = $684.50 * 4.33 ≈ $2,962.89

**Step 2: Calculate Net Income**
- Federal and state taxes: 23% of gross income
- Savings: 5% of gross income

Taxes = 23% of $2,962.89 ≈ $681.47
Savings = 5% of $2,962.89 ≈ $148.14
Remaining income after taxes and savings = $2,962.89 - $681.47 - $148.14 ≈ $2,133.28

**Step 3: Calculate Housing Expense Range**
- Recommended housing expense range: 25%-30% of gross income

25% of $2,962.89 ≈ $740.72
30% of $2,962.89 ≈ $888.87

Therefore, the recommended housing expense range is approximately $740.72 to $888.87.

**Step 4: Determine if Monthly Rent is Within the Range**
- Abe's potential rent: $1,500 per month

Since $1,500 is not within the $740.72 to $888.87 range, the rent exceeds the recommended housing expense range.

**Step 5: Check if Abe Can Make Monthly Payments**
- Remaining income after taxes and savings: $2,133.28
- Monthly rent: $1,500
Remaining income after rent = $2,133.28 - $1,500 = $633.28

Therefore, Abe can cover his rent and still have $633.28 left for other expenses

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