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Mr. Donald Heffernan, a 35 years old account manager At Wells Fargo has gross annual income after all deductibles of $85,000. Mrs. Heffernan quit her job at Walmart to take care of their twin kids, Luke and Christine. So Mr. Heffernan is the only income earner at his house hold.
Mr. Heffernan is filing income using the following
“Married filing jointly” tax rate schedule.
|
Taxable income over |
Not over |
Tax rate |
|
$0 |
18,450 |
10% |
|
18,451 |
74,900 |
15% |
|
74,901 |
151,200 |
25% |
|
151,201 |
230,450 |
28% |
|
230,451 |
411,500 |
33% |
|
411,501 |
464,850 |
35% |
|
464,851 |
…… |
39.6% |
Please show calculations for questions below.
1- Mr. Heffernan’s net annual income is:
2. Mr. Heffernan’s net Monthly income is:
3. Mrs. Heffernan just won the state sweepstake. She got two options to get her prize. (1) To receive $250,000 today. Or (2) to receive a monthly payment of $2000 for 25 years period. If Mrs. Heffernan appropriate discount rate is 6%. Which option should Mrs. Heffernan go with?
Note: if Mrs. Heffernan choose to go with option 1, she will invest the $250,000 at 6% to generate monthly income for the 25 years period.
4- The Heffernan’s total monthly income is:
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