Personal Financial Planning Assignment 1

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ADMS 3541 Winter 2016 Assignment 1 Due at the start of class in Week 8 (Section R on March 3,2016) 100 marks, 25 each question. Instructions: Each group must submit the assignment to the instructor at the beginning of class on the date the assignment is due. Textual portions must be typed and double-spaced. This does not include variables, labels and brief notes of explanation. Use at least one inch margins all around. 1. Double-sided is preferred, if you can do it with your printer. 2. Use 8 ½ X 11 paper only. 3. Do not use report covers. 4. Staple your assignment prior to handing it in. 5. Be sure to print clearly your names, student numbers, section and Assignment 1 at the top of the first page. 6. Spelling and…show more content…
Question 2: Debt and credit management Magda is a successful lawyer. She earns $7,500 net monthly from her practice and all of her personal expenses monthly sum up to $6,400. She is looking to get a loan to purchase her dream car. The car costs $65,000. She has $10,000 to put down on the purchase. She can get a loan from the bank for 3.75% compounded monthly or the dealer offers her a loan for 2.99% compounded monthly with no money down. Therefore, she has the option of putting the $10,000 into the car purchase if she goes with the bank, or keeping it in case she wants to buy fancy rims if she goes with the dealer. Both options are for a 5 year term. Magda’s sister Amanda is always in competition with her so she is getting a better car and also needs a loan. Amanda is an electrician. She earns $4,000 net monthly and her monthly personal expenses sum up to $3,150. The car costs $82,500. She has no money to put down. The dealer has offered her a loan for 4.25% compounded monthly on a 5 year term. a) What is the monthly payment for each Magda and Amanda assuming Magda selects the bank loan? b) Should Magda select the loan from the bank or the dealer? Include calculations to support your response including total interest paid on each option. c) Based on the information provided discuss why Magda has more options for the loan and a lower rate. d) Can they afford their respective cars? Why or why not, support your response with figures.
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