Free cash flow is the amount of cash that a company has left over after it has paid for all of its expenses. In other words, it is the amount of money that can be reinvested in new project or paid out to investors without having to expand operations or running down its existing operations. Discretionary income is equivalent for individuals. Discretionary income is defined as income available for spending after subtracting taxes and essential expenses to maintain an individuals current standard of living.

According to the Career Center, graduates earned an average salary of $49,100 per year their first year after graduation. Assume that is the salary that you will earn following graduation. (If you think you will make a different amount, feel free to use that amount instead to complete the assignment.) Answer all of the following questions based on the lifestyle that you expect to be able to live the year after you graduate. Create your own excel spread sheet what will your monthly income be before taxes?

1. Tax schedules and instructions for calculation are attached. What will your yearly tax bill be?

2. What will your monthly income be after taxes?

3. List and estimate your essential (regularly recurring) expenses per month? This includes but is not limited to rent, health insurance (Seton Hall employee insurance options are attached to help you estimate health insurance costs), student loan payments, car payment, car insurance, gas, electric bill, cable bill, phone bill, groceries, contact lenses, etc.

4. Discretionary income is net income after taxes minus recurring expenses. What will your discretionary income per month be?

5. Spending of discretionary income includes all expenses that you do not need to spend to survive. This includes but is not limited to gym, tanning, laundry, hair care, mani/pedi, car wash, movies, dinner and drinks with friends, coffee, snacks, clothing, video games, pizza, cigarettes, gifts, vacations, etc. List and estimate your expected discretionary purchases per month?

6. What proportion of your monthly discretionary income do you plan to save for future investments (buying a house, buying a car, retirement, etc)?

7. How much discretionary income to you plan to save per year?

8. What did you learn from this assignment?

TAXES:

If you choose to live in Florida (or most any other state) after you graduate not only do you need to pay federal taxes but you also need to pay state income taxes. State income tax is deductible from federal income tax. To properly determine your tax bill follow these steps:

1. Calculate the amount of state income taxes you owe.

2. Then, deduct (subtract) your state income taxes from your total income.

3. Use the new number (income minus state taxes)to calculate your federal tax bill.

4.Your total tax bill is the sum of your state tax bill plus your federal tax bill.

TAX RATES (FEDERAL)

Marginal Tax Rate	Single	Married Filing Jointly	Married Filing Separately	Head of Household
10%	$0 $8,350	$0 $16,700	$0 $8,350	$0 $11,950
15%	$8,351 $33,950	$16,701 $67,900	$8,351 $33,950	$11,951 $45,500
25%	$33,951 $82,250	$67,901 $137,050	$33,951 $68,525	$45,501 $117,450
28%	$82,251 $171,550	$137,051 $208,850	$68,525 $104,425	$117,451 $190,200
33%	$171,551 $372,950	$208,851 $372,950	$104,426 $186,475	$190,201 - $372,950
35%	$372,951+	$372,951+	$186,476+	$372,951+

INCOME TAX RATES:

Marginal Tax Rate	Household
1.4%	$0 $20,000
1.75%	$20,001 $35,000
3.5%	$35,001 $40,000
5.525%	$40,001 $75,000
6.37%	$75,0001 $500,000
8.97%	$500,001+

HEALTH CARE OPTIONS: Employess can choose between two options.
CIGNA Medical Rates	Monthly Rate	Bi-Weekly Rate
Point of Service
Employee	$81.57	$37.65
Employee and Spouse	$160.50	$74.08
Employee and Children	$141.00	$65.08
Employee and Family	$238.50	$110.08

Open Access Plus
Employee	$92.55	$42.71
Employee and Spouse	$237.00	$109.38
Employee and Children	$207.75	$95.88
Employee and Family	$354.00	$163.38