WEEK NINE: CHAPTER EIGHT CLASS DISCUSSION Question: Ratios have applications to many disciplines.

Investors talk of price earnings ratios. Accountants use the current ratio, etc. Provide me with some example of ratios in some other disciplines. Oftentimes employers use percentages to determine the withholding of FICA, Federal and State Tax. For instance, State tax for a salary income, in Tennessee. A total of $112.00 biweekly, $35.00 plus 2.5% and no State Tax, plus $2,912.00 is a real life scenario for a family on a budget of $80,000.00 annually from a one or two income household. However, sales tax that is applied to a $20,000 purchase at 7.75% is $705.00 of $20,000.00. Remember, the State of Tennessee doesnt have State income tax, so a net gain of .0057%, or $458.00 based on an $80,000 income is from an analysis of cost of living. An additional $2,912 per year is saved because income tax is not paid in Tennessee, which is a total gain of $3,370.00 because we moved from Kansas City. On the other hand, the Kansas City results per 100,000 residents is Homicide is 455 and Knoxville is 366, with a 20% decrease. Robbery for Kansas City is for 19 and Knoxville 9 with a 53% decrease, assault for Kansas City 829 and Knoxville is 756 with 9% decrease, and the Crime lab is 325 for Kansas City and Knoxville is 242 with a 26% and Rape is 68% for Kansas City. A bank loan amortizes at $1,000.00 at various interest rates for a period of 2 to 5 years. An 8% interest for a loan in 2 years is $45.23, 3 years is $31.34, and 4 years is $24.41 and 5 years is $20.28. Franco invested $4,000.00 in money market funds. Part was invested at 14% interest, the rest at 11%. At the end of each year the fund company pays interest. After one year he earned $482.00 in simple interest. How much was invested at each interest rate? There was $1,400.00 invested at a rate of fourteen percent (14%). The interest rate of 11% yielded $2,600.00 (Tobey, 2003, page 241). Did you know? Technology helps reduce errors and increase speed in computing taxes as compared with manual use of tax tables. In addition to tax tables, is the ability to store on a computer or download off the web (http://www.IRS.USTreas.gov) and then use the percentages to accurately and quickly compute payroll taxes. Employers must pay payroll taxes, such as FICA tax and Federal and State unemployment taxes. An employer must pay into the federally funded unemployment must pay into the federally funded unemployment tax on the employee wages and salaries, known as FUTA. The employer pays taxes between 5.4% to 6.2%, for the first $7,000.00 that the employee earns. The SUTA is state sponsored unemployment insurance program that requires employers to pay into the program. A few states require employees to make a contribution. However, in the states that require the employer to pay, then the base rate for SUTA taxes is 5.4% of the first $7,000.00 paid to each employee on the companys payroll. The base rate can be adjusted to a merit rating of 1% to 5.4%, which reflects a companys stability or instability in regards to employment retention. To illustrate, an employer with 100 employees who each earn $7,000 or more per year saves $30,800 annually if it has a merit Sanders, Thalia C. Week 9: 8/20-26/2007 Page 1 of 2 Chapter Eight 9/19/2012 MAT100-006016*200705

rating of 1.0% versus 5.4%. This is computed by comparing taxes of $37,800.00 at the 5.4% rate to only $7,000.00 at the 1% rate (Larson, Wild & Chiappetta, 2002, page 492). Law requires employers to withhold FICA taxes from each employees salary or wages, every pay day. Furthermore, the taxes withholding for payroll that are designated to Social Security and Medicare are always computed separately. In 2000, the standard amount withheld from employees pay for Social Security is 6.2% for the first $76,200 earned in a calendar year, or a maximum of $4,724.40. The Medicare tax 1.45% of all wages the employee earns, and there is no maximum amount (Larson, page 492). A bank loans $49,500 with an annual rate of 8.5% if the loan period of 30 years. Annual loan payments were: $4,567.32. Monthly payments: $380.61 First year calendar interest: $2,100.54 Interest over term of loan: $87,519.60 Sum of all payments: $137,019.90 ~ THALIA SANDERS http://searchwithmaroon5b.prodege.vmn.net/. Cited references: John Tobey and Jefferey Slater. (2002). Beginning Algebra, 5th edition. Prentice Hall: Upper Saddle River, NJ 07458. ISBN: 0-13-0932280. http://www.prenhall.com/tobey_beginning. Larson, K.D., Wild, J.J., & B. Chiappetta, Fundamental Accounting Principles, FAP16e, 16th edition. McGraw-Hill: New York. http://www.mhhe.com/FAP16e. ISBN: 0-07242339-0.

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