Question

1. kate is a nurse who earns $75 961.60/year. she has a weekly deduction of $75.00 off of her paycheque for a savings plan. she wanted to calculate her net monthly net pay. here are her calculations.

kate’s calculation
step 1:
cpp = $75 961.60 × 0.0495
= $3 760.10
step 2:
ei = $75 961.60 × 0.0188
= $1 428.08
step 3:
income tax = first bracket tax + second bracket tax
= (tax rate × first bracket pay) + (tax rate × second bracket pay)
= (25% × $43 561.00) + (32% × 32 400.60)
= (0.25 × $43 561.00) + (0.32 × 32 400.60)
= $10 890.25 + $10 368.19
= $21 258.44
step 4:
annual net pay = $75 961 - cpp - ei - income tax
= $75 961.60 - $3 760.10 - $1 428.08 - $21 258.28
= $49 514.98
step 5:
monthly net = $49 514.98 / 12
= $4 126.25

Explanation:

Step1: Verify annual CPP deduction

$\text{CPP} = \$75961.60 \times 0.0495 = \$3760.10$

Step2: Verify annual EI deduction

$\text{EI} = \$75961.60 \times 0.0188 = \$1428.08$

Step3: Verify annual income tax

First bracket: $0.25 \times \$43561.00 = \$10890.25$
Second bracket: $0.32 \times (\$75961.60 - \$43561.00) = 0.32 \times \$32400.60 = \$10368.19$
$\text{Income tax} = \$10890.25 + \$10368.19 = \$21258.44$

Step4: Correct annual net pay (include weekly savings)

Annual savings deduction: $\$75.00 \times 52 = \$3900$
$\text{Annual net pay} = \$75961.60 - \$3760.10 - \$1428.08 - \$21258.44 - \$3900$
$\text{Annual net pay} = \$75961.60 - (\$3760.10 + \$1428.08 + \$21258.44 + \$3900) = \$75961.60 - \$30346.62 = \$45614.98$

Step5: Calculate correct monthly net pay

$\text{Monthly net pay} = \frac{\$45614.98}{12}$

Answer:

$\$3801.25$ (rounded to the nearest cent)

Note: Kate's original calculation missed the annual $\$3900$ savings deduction, and used an incorrect income tax value ($\$21258.28$ instead of $\$21258.44$) in Step 4, leading to an overstated net pay.