Chapter 11, Problem 1P

Summary Introduction

To determine: Minimum amount required for an emergency fund.

Explanation of Solution

Calculation of minimum amount required:

$\begin{array}{c}\text{Minimum amount required}=\text{Monthly}\text{expenses}\times \text{Minimum}\text{number}\text{of}\text{months}\\ =\$4,050\times 3\\ =\$12,150\end{array}$

Hence, minimum amount required for an emergency fund is $12,150