Solved on Mar 26, 2024

Jake earns $\$87,190$ per year and pays $25\%$ in taxes. He should use $28\%$ of his gross monthly income for rent. Estimate the maximum monthly rent he can afford, rounded to the nearest cent.

STEP 1

1. Jake's annual income is $87,190$ dollars.
2. Jake pays $25\%$ of his gross monthly income in federal and state taxes.
3. Jake should use $28\%$ of his gross monthly income for rent.
4. The monthly income is obtained by dividing the annual income by $12$ .
5. The amount available for rent is calculated after taxes are deducted.
6. The final rent estimate should be rounded to the nearest cent.

STEP 2

1. Calculate Jake's gross monthly income.
2. Calculate the amount paid in taxes each month.
3. Calculate the amount available for rent after taxes.
4. Apply the $28\%$ rule to estimate the monthly rent.
5. Round the final estimate to the nearest cent.

STEP 3

Calculate Jake's gross monthly income by dividing his annual income by $12$ .
$\text{Gross monthly income} = \frac{\$87,190}{12}$

STEP 4

Perform the division to find the gross monthly income.
$\text{Gross monthly income} = \$7,265.83$

STEP 5

Calculate the amount paid in taxes each month by multiplying the gross monthly income by $25\%$ .
$\text{Taxes paid} = \$7,265.83 \times 0.25$

STEP 6

Perform the multiplication to find the monthly tax amount.
$\text{Taxes paid} = \$1,816.46$

STEP 7

Calculate the amount available for rent after taxes by subtracting the monthly tax amount from the gross monthly income.
$\text{Amount available for rent} = \$7,265.83 - \$1,816.46$

STEP 8

Perform the subtraction to find the amount available for rent.
$\text{Amount available for rent} = \$5,449.37$

STEP 9

Apply the $28\%$ rule to estimate the monthly rent by multiplying the amount available for rent by $28\%$ .
$\text{Estimated monthly rent} = \$5,449.37 \times 0.28$

STEP 10

Perform the multiplication to find the estimated monthly rent before rounding.
$\text{Estimated monthly rent} = \$1,525.82$

STEP 11

Round the estimated monthly rent to the nearest cent.
$\text{Estimated monthly rent (rounded)} = \$1,525.82$
The estimated monthly rent that Jake can afford, rounded to the nearest cent, is $\$1,525.82$ . However, this does not match any of the provided options. It seems there may have been a misunderstanding in the calculation process. Let's review the steps to ensure accuracy.
Upon reviewing, I realize that in STEP_6, the amount available for rent should not have been calculated after taxes because the $28\%$ rule applies to the gross monthly income, not the after-tax income. Let's correct this:

STEP 12

Recalculate the estimated monthly rent using the correct gross monthly income.
$\text{Estimated monthly rent} = \$7,265.83 \times 0.28$

STEP 13

Perform the multiplication to find the correct estimated monthly rent before rounding.
$\text{Estimated monthly rent} = \$2,034.43$

STEP 14

Round the corrected estimated monthly rent to the nearest cent.
$\text{Estimated monthly rent (rounded)} = \$2,034.43$
The corrected estimated monthly rent that Jake can afford, rounded to the nearest cent, is $\$2,034.43$ . This matches one of the provided options.
The correct answer is $\$2,034.43$ .

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Jake earns $\$87,190$ per year and pays $25\%$ in taxes. He should use $28\%$ of his gross monthly income for rent. Estimate the maximum monthly rent he can afford, rounded to the nearest cent.

STEP 1

STEP 2

1. Calculate Jake's gross monthly income.
2. Calculate the amount paid in taxes each month.
3. Calculate the amount available for rent after taxes.
4. Apply the $28\%$ rule to estimate the monthly rent.
5. Round the final estimate to the nearest cent.

STEP 3

Calculate Jake's gross monthly income by dividing his annual income by $12$ .
$\text{Gross monthly income} = \frac{\$87,190}{12}$

STEP 4

Perform the division to find the gross monthly income.
$\text{Gross monthly income} = \$7,265.83$

STEP 5

Calculate the amount paid in taxes each month by multiplying the gross monthly income by $25\%$ .
$\text{Taxes paid} = \$7,265.83 \times 0.25$

STEP 6

Perform the multiplication to find the monthly tax amount.
$\text{Taxes paid} = \$1,816.46$

STEP 7

Calculate the amount available for rent after taxes by subtracting the monthly tax amount from the gross monthly income.
$\text{Amount available for rent} = \$7,265.83 - \$1,816.46$

STEP 8

Perform the subtraction to find the amount available for rent.
$\text{Amount available for rent} = \$5,449.37$

STEP 9

Apply the $28\%$ rule to estimate the monthly rent by multiplying the amount available for rent by $28\%$ .
$\text{Estimated monthly rent} = \$5,449.37 \times 0.28$

STEP 10

Perform the multiplication to find the estimated monthly rent before rounding.
$\text{Estimated monthly rent} = \$1,525.82$

STEP 11

STEP 12

Recalculate the estimated monthly rent using the correct gross monthly income.
$\text{Estimated monthly rent} = \$7,265.83 \times 0.28$

STEP 13

Perform the multiplication to find the correct estimated monthly rent before rounding.
$\text{Estimated monthly rent} = \$2,034.43$

STEP 14

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Jake earns $87,190\$87,190$87,190 per year and pays 25%25\%25% in taxes. He should use 28%28\%28% of his gross monthly income for rent. Estimate the maximum monthly rent he can afford, rounded to the nearest cent.

STEP 1

STEP 2

1. Calculate Jake's gross monthly income.2. Calculate the amount paid in taxes each month.3. Calculate the amount available for rent after taxes.4. Apply the 28%28\%28% rule to estimate the monthly rent.5. Round the final estimate to the nearest cent.

STEP 3

Calculate Jake's gross monthly income by dividing his annual income by 121212.Gross monthly income=$87,19012 \text{Gross monthly income} = \frac{\$87,190}{12} Gross monthly income=12$87,190​

STEP 4

Perform the division to find the gross monthly income.Gross monthly income=$7,265.83 \text{Gross monthly income} = \$7,265.83 Gross monthly income=$7,265.83

STEP 5

Calculate the amount paid in taxes each month by multiplying the gross monthly income by 25%25\%25%.Taxes paid=$7,265.83×0.25 \text{Taxes paid} = \$7,265.83 \times 0.25 Taxes paid=$7,265.83×0.25

STEP 6

Perform the multiplication to find the monthly tax amount.Taxes paid=$1,816.46 \text{Taxes paid} = \$1,816.46 Taxes paid=$1,816.46

STEP 7

Calculate the amount available for rent after taxes by subtracting the monthly tax amount from the gross monthly income.Amount available for rent=$7,265.83−$1,816.46 \text{Amount available for rent} = \$7,265.83 - \$1,816.46 Amount available for rent=$7,265.83−$1,816.46

STEP 8

Perform the subtraction to find the amount available for rent.Amount available for rent=$5,449.37 \text{Amount available for rent} = \$5,449.37 Amount available for rent=$5,449.37

STEP 9

Apply the 28%28\%28% rule to estimate the monthly rent by multiplying the amount available for rent by 28%28\%28%.Estimated monthly rent=$5,449.37×0.28 \text{Estimated monthly rent} = \$5,449.37 \times 0.28 Estimated monthly rent=$5,449.37×0.28

STEP 10

Perform the multiplication to find the estimated monthly rent before rounding.Estimated monthly rent=$1,525.82 \text{Estimated monthly rent} = \$1,525.82 Estimated monthly rent=$1,525.82

STEP 11

STEP 12

Recalculate the estimated monthly rent using the correct gross monthly income.Estimated monthly rent=$7,265.83×0.28 \text{Estimated monthly rent} = \$7,265.83 \times 0.28 Estimated monthly rent=$7,265.83×0.28

STEP 13

Perform the multiplication to find the correct estimated monthly rent before rounding.Estimated monthly rent=$2,034.43 \text{Estimated monthly rent} = \$2,034.43 Estimated monthly rent=$2,034.43

STEP 14

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Jake earns $\$87,190$ per year and pays $25\%$ in taxes. He should use $28\%$ of his gross monthly income for rent. Estimate the maximum monthly rent he can afford, rounded to the nearest cent.

1. Calculate Jake's gross monthly income.
2. Calculate the amount paid in taxes each month.
3. Calculate the amount available for rent after taxes.
4. Apply the $28\%$ rule to estimate the monthly rent.
5. Round the final estimate to the nearest cent.

Calculate Jake's gross monthly income by dividing his annual income by $12$ .
$\text{Gross monthly income} = \frac{\$87,190}{12}$

Perform the division to find the gross monthly income.
$\text{Gross monthly income} = \$7,265.83$

Calculate the amount paid in taxes each month by multiplying the gross monthly income by $25\%$ .
$\text{Taxes paid} = \$7,265.83 \times 0.25$

Perform the multiplication to find the monthly tax amount.
$\text{Taxes paid} = \$1,816.46$

Calculate the amount available for rent after taxes by subtracting the monthly tax amount from the gross monthly income.
$\text{Amount available for rent} = \$7,265.83 - \$1,816.46$

Perform the subtraction to find the amount available for rent.
$\text{Amount available for rent} = \$5,449.37$

Apply the $28\%$ rule to estimate the monthly rent by multiplying the amount available for rent by $28\%$ .
$\text{Estimated monthly rent} = \$5,449.37 \times 0.28$

Perform the multiplication to find the estimated monthly rent before rounding.
$\text{Estimated monthly rent} = \$1,525.82$

Recalculate the estimated monthly rent using the correct gross monthly income.
$\text{Estimated monthly rent} = \$7,265.83 \times 0.28$

Perform the multiplication to find the correct estimated monthly rent before rounding.
$\text{Estimated monthly rent} = \$2,034.43$