Question

Stephanie recently received an offer for a job that will pay her $70,000 a year (before taxes). She knows that she'd like to be able to buy a new vehicle within a few years after graduating this upcoming spring. Here's some more information about Stephanie's goal: She anticipates $70,000 a year as an annual pre-tax salary (with $4,500 a month post-tax) $30,000 owed in student loans when she graduates, with a $200 monthly payment $5,000 in her savings account, which earns 2.5% annually $2,000 in her checking account A used car valued at about $2,000 A computer and other various personal items valued at about $3,000 She thinks she'll be able to live off of $3,000 a month for living expenses (food, rent, utilities) She's like to buy a new sedan (perhaps a corolla) with some upgrade options. Her estimate is $20,000 in two years Her goal is to be able to pay for the call without taking on any additional loan •

Answer 1

To calculate approximate months that will she takes her to buy a New car is 12 months.

Calculation:

All Income and expenses are calculated monthly.

She Had Post Tax Income - $4500

Interest Expense - $1.04 [refer note]

Monthly Payment - ($200)

Living Expenses - ($3000)

Monthly Savings - $1301.04 [Approximately]

She had $5000 in his saving account

So, Total Months Will be $1301.04*12 + 5000

= ~ 20,600 [ 20,000 Amount will be covered in 12th month]

So, Months will be 12.

Note:Interest rate calculated as ($5000*2.5)/100

= 12.5 [Annually]

Monthly it will be 12.5/12

= $1.04