Suppose that Trevor and Rachel McAdams are married and have three children. Rach

Question

Suppose that Trevor and Rachel McAdams are married and have three children. Rachel is the primary earner in the household. Trevor is considering joining the labor force, at which point he would earn $60 per hour for 40 hours per week. The cost of child care would be $10 per hour per child for 40 hours per week. Trevor is indifferent between working and staying at home except for the financial impact. Assume that his tax rate is 40%. Question 1 of 7 2.0 Point:s 0_ Accepted characters Assume that child care is NOT tax deductible and that child care at home is NOT imputed and taxed. Calculate the weekly difference between Trevor's take-home pay (ater paying taxes and child care) if he works versus if he stays home to care for the children. (Do not enter commas, or dollar signs) S

Explanation / Answer

According to the Problem,

Earning of trevor per hour (a)= 60

Number of hours per week (b)= 40

The tax rate (t)= 40% = 0.4

The cost of child care per hour(x) = 10

Number of hours per week (y)= 40

Total cost of child care per week = x*y = 10*40 = 400

Total income of treveor before tax(S) = a*b = 40 *60 = 2400

Net tax payable (T) = 2400*t = 2400*0.4 = 960

Net income of Trevor(Take home) = S-T = 2400-960 = 1440

The weekly difference between trevors pay and child care = 1440-400 = 1040

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.