What Is The Prime Reason That Jenny's Discretionary (2024)

FAQs

What Is The Prime Reason That Jenny's Discretionary? ›

What is the prime reason that Jenny's discretionary income is more volatile than her salary? Answer : Her mortgage payments and necessities are fixed.

Her cost of living is affected by high inflation in the neighborhood. Discretionary income is the remaining amount after deducting taxes, mandatory contributions, and other necessary costs including mortgage. Taxes and mortgage payments normally have fixed rates which will not change the discretionary income.

How is the scenario of Jenny's changing discretionary income with her changing salary analogous to the nature of equities? A) It shows how the value of equities can fluctuate with changes in a company's profitability.

Expert-Verified Answer

is equal to the change in salary because the fixed costs remain constant. Therefore, as Jenny's salary increases, her discretionary income increases by the same amount, assuming that the fixed costs do not change.

Discretionary income is the amount of an individual's income that is left for spending, investing, or saving after paying taxes and paying for personal necessities, such as food, shelter, and clothing. Discretionary income includes money spent on luxury items, vacations, and nonessential goods and services.

Discretionary income is the amount left from a person's earnings after paying taxes and paying for personal needs such as food and shelter.

When individuals and households spend more of their discretionary income on goods and services, vacations, luxury items, and other nonessential items, money is funneled towards businesses that provide those goods and services.

Key takeaways

Discretionary income is the amount of money you have left after paying for necessary expenses, like taxes, housing and food. You use discretionary income for "extra" things, like entertainment, savings and investments. Depending on the purpose, discretionary income may be calculated in different ways.

Answer. Financial leverage increased Jenny's potential return on investment by allowing her to purchase a house with borrowed funds, which could amplify profits if the property appreciates in value.

How is discretionary income calculated for the Pay As You Earn (PAYE) Plan? Discretionary income for the PAYE Plan is the difference between your annual income and 150% of the poverty guideline for your family size and state of residence. Learn more about the PAYE Plan. Learn more about PAYE Plan eligibility.

How is discretionary income determined? ›

Take your disposable income, which is the amount of money after taxes left, for example, in your paycheck. Subtract all of your necessities like paying for rent or housing, student loans, utilities, and food, and whatever is left over to spend, save, or invest is your discretionary income.

Disposable income is your income after taxes. It's more useful to consider discretionary income as a percentage of your budget. It can be distilled down to a single number. Discretionary income is used to determine how much you should save and how much you can spend.

What is the primary reason for US gov bonds to ripple through the bond market? Government bonds form a large portion of investor holdings, and corporate bonds are often priced relative to gov bonds.

Final answer: The main reason one discounts future cash flows in the absolute valuation process is due to the fact that investors prefer cash flows today to cash flows in the future, based on the potential earning capacity of the current money. In other words, this is due to the time value of money.

It expresses that the manager believes the company will have favorable returns after the IPO. So, the best answer is c. An IPO reveals the value of the manager owners stake.