Question

Chichi's gross income is 100,000 and her disposable income is 80,000. Her saving ratio is 5%....

Chichi's gross income is 100,000 and her disposable income is 80,000. Her saving ratio is 5%. What is the minimum emergency fund should she maintain?

a.$20,000

b.$19,000

c.$18,000

d.$17,000

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Answer #1

Solution:

Gross Income     100,000

Less: Disposable income    80000

Savings    20000

Saving ratio     1000 (20000*5%)

Minimum emergency fund maintain    19000 (20000-1000)

Conclusion: Disposable income means income after paying taxes thus deducted from gross income and got amount 20000 after saving 20000 Saving is 5% that means 20000*5%= 1000. So she should maintain emergency fund $19000

Ans 19000

  

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