Answered: a, a self-employed accountant,…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Luna, a self-employed accountant, currently earns $100,000 annually. Luna has been able to save 18% of her annual Schedule C net income. Assume that Luna paid $11,000 in Social Security taxes, and that she plans to pay off her mortgage at retirement, thereby relieving her of her only debt. Luna presently pays $1,500 per month toward the mortgage principal and interest. Based on the information provided herein, what do you expect Luna's wage replacement ratio to be at retirement?

Question 2 options:

a. 49%

b. 53%

c. 59%

d. 63%

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