Neil recently graduated from college. He's employed by a space exploration company and makes approximately $65,000 per year. His primary goal is to begin savings for an emergency fund. After looking at his budget, Neil has determined that in the case of a severe emergency he will need to replace 45% of his annual income. This is a conservative estimate, but Neil believes the amount should be sufficient to pay his rent, car payment, food, utility, and insurance expenses. ONLY NEED D AND E ANSWERED

A. How much income does Neal believe he needs in the case of a severe emergency?

$29,250

B. After discussing his alternatives with you, Neil assumes that he can meet all his necessary expenses with as little as $29,000 per year. His goals to establish a six-month emergency fund, how much should he have on hand today? What will he need if he has a three-month emergency fund goal?

He needs $14,500 for his 6 month emergency fund and $7,250 for a 3 month emergency fund goal.

C. If Neil can save $300 per month toward his emergency fund goal, how long will it take him to obtain 3 and six months of needed expenses, assuming he can earn a 2% rate of return on his savings?

About 2 years to obtain 3 months of needed expenses and 47 months to obtain 6 months of needed expenses.

D. What type of assets would be appropriate for his emergency fund?

E. Today Neil has few assets that he can use to pay emergency expenses. Until he saves enough for an emergency fund, what other options does he have for funding a potential emergency?