Case Study - The Benefits of Financial Freedom

For option 2 I calculated the savings I receive from reduced payment. For that I used difference between the mortgage payments as annuity payment for 180 months for Question A and for 60 months for Question B

1. A condo in Orange Beach, Alabama, listed for $1.4 million with 20% down and financing at 5% for 30 years. What would the monthly payment be?

15. The condominium at the beach that you want to buy costs $249,500. You plan to make a cash down payment of 20 percent and finance the balance over 10 years at 6.75 percent. What will be the amount of your monthly mortgage payment?

4. (TCO C) Alan and Barbara are in the process of purchasing their first home. However, they cannot decide whether a 15-year fixed-rate mortgage or a 30-year fixed-rate mortgage is best for them. They have decided to finance $200,000 and can get the 15-year mortgage at 4.5% and the 30-year mortgage at 5%. (35 points total)

2. St. Luke’s Convalescent Center has $200,000 in surplus funds that it wishes to invest in marketable securities. If transaction costs to buy and sell the securities are $2,200 and the securities will be held for three months, what required annual yield must be earned before the investment makes economic sense?

a. I = 4%, PV = $74,000, N = 20, FV = $162,143.11 a. Using Excel enter '=-FV(4%,20,,74000) = $162,143.11 salary needed to keep pace with inflation. b. FV = $2 million, N = 25, I = 8%, PMT = $27,357.26 a. Using Excel, enter '=-PMT(8%,25,0,2000000)' = $27,357.26 as the necessary annual payment to be saved. c. PMT = $160,000, N = 20, I = 4%, PV = $2,174,452.22 a. Using Excel, enter '=-PV(4%,20,160000)' = $2,174,452.22 needed for retirement. d. FV = $3.5 million, N = 30, I = 7%, PMT = $37,052.41 a. Using Excel, enter '=-PMT(7%,30,0,3500000)' = $37,052.41 annual payment to be saved.

In the article, “The Case For Free Money: Why Don’t We Have Universal Basic Income,” James Surowiecki presents the benefits of a universal basic income and why it is appealing to workers and politicians. After an experiment, known as “Mincome,” implanted universal basic income in Dauphin during the 1970s, evidence clearly shows that the Canadian town received remarkable advantages, such as lowered dropout rates and hospitalization rates. The idea of universal basic income is not new, however, it is regaining popularity. Contrary to popular belief, some from both the Democratic and Republican parties support assured basic income, Surowiecki claims. The current push for universal basic income is emboldened by the rising concern of advancing

8. If you want to purchase a home. You have $15,000 to put down. All you can afford is $1,500.00 per month and you do not want to finance for more than 15 years @ 6% interest, (your taxes will be $85.00 per month and insurance $200.00 a month), what is the amount you can pay for your home? (Show all your work)

A person deposited $500 in a savings account that pays 5% annual interest that is compounded yearly. At the end of 10 years, how much money will be in the savings account? (Bluman, A. G. 2005, page 230).

Just Graduated makes $2,666.66 every month because he makes $32, 000 a year and there is 12 months in a year. From the $2,666. 66 the Just Graduated must pay $2000 for his rent and other things he needs to buy like food and cloths. Just Graduated will be left with $666.66 and he needs to pay for his student loan, which is $25, 000. Just Graduated is suggested to take $333.33 from his monthly income ($666.66) and pay for his student depth, which will take about 6 and a half years to pay off the student loan (75 months). With the rest of the money ($333.33) he should put $166.66 into a tax free savings account (TFSA) to his home bank or any bank he wishes to put his money into. Just Graduated should put his money into his TFSA because a TFSA is an account that gives tax benefits for saving; Any money that is put into a TFSA will not be taxed no matter what and the Just Graduated will receive a small amount of money for having money in that account. Just Graduated should keep the rest of the $166.66 to do anything he likes (movies, trips and going to parties.). It is recommended he pay off his depth fast as possible because

After the calculations you end up coming out with a rate of 14.87%. The third and final part of question three asks what rate you will need if the interest is compounded semiannually. All you have to do is double the amount of terms and you will come out with a lower number of 7.177%. Since the interest is compounded semiannually that means that you will need to times that number by two and you come out with your final number of 14.35%.

“The average American owns 3.5 credit cards and $15,799 in credit card debt… totaling consumer debt of $2.43 trillion in the USA alone.” (Beckner). Debt forces many people into depression and worrying lives. People struggle to discover happiness through financing goods, but struggle even more to find a way out of debt. Through consumerism, people lose their finances in department stores, car dealerships, and much more. Most of the possessions people buy with credit cards become impractical within a few months. The void they search for is never really filled. Consumerism is just a way to get the economy going, without thinking of a person’s individual finance

(Compound value solving for I) at what annual rate would the following have to be investe

You are saving for the college education of your two children. They are two years apart in age; one will begin college 15 years from today and the other will begin 17 years from today. You estimate your children’s college expenses to be $23,000 per year per child, payable at the beginning of each school year. The annual interest rate is 5.5 percent. How much money must you deposit in account each year to fund your children’s education? Your deposits begin one year from today. You will make your last deposit when your oldest child enters college. Assume four years of college

Assume that the annual payments in the sixth year is equal to the rental payment in the fifth year ( 112.9 and 86.0) and the remainder of the lump sum values (54.6 and 17.8) is due in the seventh year. With a discount rate of 5.4%, the present values of the rental payments for the years 2006 and 2007 are as follows: