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Amy works in a shop. Her annual gross salary is $25,000. From this, she must pay...

Amy works in a shop. Her annual gross salary is $25,000. From this, she must pay social security (calculated as 12% of her gross pay) plus 8% income tax. In addition to taxes, she must repay a loan to her employers at a rate of $125 per month, which comes out of her post tax income (i.e. income after tax has been calculated). What is Amy's take home pay per annum? Give your answer in dollars to the nearest dollar.

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Expert Solution

Computation of take home pay of Amy:

Gross annual salary –                                   25000

Less payment of social security –                   3000

(12% of 25000)                                               22000

Less: income tax                                              1760

(8% of 22000)                                                  20240

Less: repayment of loan                                 1500

($125*12 = 1500)                                            18740

Hence take home salary of Amy is $18,740

jeff jeffy answered 2 years ago
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