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

FAQs

What is the primary reason that Jenny's discretionary income? ›

What is the prime reason that Jenny's discretionary income is more volatile than her salary? Answer : Her mortgage payments and necessities are fixed. 68. A luxury cell phone maker has a high fixed-cost base and a lot of debt.

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.

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.

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.

Discretionary income is the money you have leftover after paying for necessities like housing, groceries, everyday expenses and necessary bills.

What Is Discretionary Income? 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.

After you pay all your living expenses, the money left over to save, invest, or spend is your discretionary income. If your disposable income goes down, you will have less discretionary income, which in turn can impact financial markets and the overall economy.

For the SAVE Plan, your discretionary income is the difference between your adjusted gross income (AGI) and 225% of the U.S. Department of Health and Human Services (HHS) Poverty Guideline amount for your family size and state.

The goal is to have the return on those assets exceed the cost of borrowing the funds. The goal of financial leverage is to increase profitability without using additional personal capital.

What is the primary advantage of investing in real estate using as much leverage as possible? ›

The Upside of Leverage

The reason that leverage increases returns on a property is because the cost of debt financing, such as a bank loan, is usually cheaper than the unleveraged returns a property can generate.

A leverage ratio is any one of several financial measurements that assesses the ability of a company to meet its financial obligations. A leverage ratio may also be used to measure a company's mix of operating expenses to get an idea of how changes in output will affect operating income.

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 equal to disposable income minus all payments for necessities, including a mortgage or rent payment, health insurance, food, and transportation. This portion of disposable income can be spent at will.

Understand that operating leverage refers to the proportion of fixed costs a company has in its cost structure compared to variable costs and in Jenny's situation, her fixed costs such as rent, utilities, or loan payments can be seen as a form of operating leverage.

Discretionary income is money left over after a person pays their taxes and essential goods and services like housing and food. Nonessential items like vacations and luxury goods are usually paid for with funds from discretionary income. Disposable income and discretionary income are two different things.