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An Employee Earns $40 Per Hour and 1

question 180

Essay

An employee earns $40 per hour and 1.5 times that rate for all hours in excess of 40 hours per week. Assume that the employee worked 60 hours during the week and that the gross pay prior to the current week totaled $58,000. Assume further that the social security tax rate was 6.0%, the Medicare tax rate was 1.5%, and the federal income tax to be withheld was $614.​
(a) Determine the gross pay for the week.
(b) Determine the net pay for the week.


Definitions:

Nominal rate

An interest rate or return quoted on an investment or loan, not adjusted for inflation or other factors.

Effective rate

The total compounded interest rate, expressed annually, that represents the actual financial cost of a loan or investment.

Compounded quarterly

Interest is recalculated every three months based on both the initial principal and previously earned interest, leading to exponential growth of an investment or debt.

Principal amount

The principal amount refers to the initial sum of money borrowed in a loan or invested, excluding any interest or additional fees.

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