Consumer math help! please?

[jimmy99]

Hey guys ive been really struggling with these, please help! I will give best answer.
You work 35 hours/week for 52 weeks and are given the option to be paid hourly or to go on salary. In which situation will you earn the most? (1 point)

$32,000/year
$18.50/hour
$30,000/year with a 5% bonus
$17.50/hour and a $1,500 bonus at the end of the year

Your gross pay is $1,843.45. Your involuntary deductions are FICA (7.65%), federal withholding (9%), and state withholding (6.5%). How much are you allowed for housing and fixed expenses? (1 point)

$516.17
$663.64
$510.01
$396.68


Your parents have 3 credit cards. Each has its entire credit line used, and the credit limits are $1,800.00, $2,600.00, and $3,500.00. Paying off and closing which card would increase your parents' debt ratio the most? (1 point)

$3,500.00 limit
$2,600.00 limit
$1,800.00 limit
The debt ratio remains the same.

[chumo60]

1. The work year has 35*52 = 1820 hours. At $18.50/hr, your pay would be $18.50*1820 = $33,670 per year.
By inspection, this is the highest of the choices.

It is more than $32,000, which is more than $30,000 *1.05=$31,500. Since there are 1820 hours, a dollar an hour (18.50-17.50) is more than $1500.

2. We don't know the proportion of your pay that you budget for housing and fixed expenses. After taxes, your pay will be $1843.45*(0.7685) = $1416.69.

If the items listed are required to be less than 50% of your pay, they cannot exceed $708.35.

3. Paying off debt *decreases* the debt ratio, assuming that assets are used to pay the debt. The question makes no sense.

As a rule, it is best to start with the smallest debt. That way, the psychological benefit of achievement helps you with the larger debt. It also gives you more resources with which to pay the larger debt.

[gilford]

1. Gross pay under the four scenarios is:

$32,000
18.5 * 40 * 52 = $38,480
30000 + 30000 * 0.05 = $31,500
17.5 * 40 * 52 + 1500 = $36,860

2. Total deductions are 7.65% + 9% + 6.5% = 23.15%, which leaves 100 - 23.15 = 76.85% as take-home pay.

1843.45 * 0.7685 = $1,416.69

Potentially, this full amount is available for housing and fixed expenses, but this is not a choice and it ignores variable expenses. Perhaps some information is missing from the problem?

3. If "debt ratio" means debt-to-income ratio (the normal way of looking at consumer debt), paying off debt will lower the ratio, not increase it. Paying off the credit card with the greatest debt will make the biggest change in the ratio, though.
If the ratio is inverted to "income-to-debt," paying off the credit card with the most debt will increase the ratio the most.