+1 862 207 3288 INSTRUCTIONS:
The project is an individual assignment. However, you may use your notes, book, and other resources (i.e. the Internet) to help you.
You must type the project in a word document (or PDF) and submit it through blackboard.
For parts 1 – 4, you may list your answers or write your answers in sentence form. The decision is yours for the format of the answers to parts 1 – 4.
Part 5 must be in paragraph form.
Label each part of your project (Part 1, Part 2, …) in your document.
Part 1 – Household and Income
Choose ONE scenario for this project.
Two-person household with monthly income (after taxes and payroll deductions) of $2550
Four-person household with monthly income (after taxes and payroll deductions) of $4015
Briefly describe your choice by answering these questions:
How many adults are in your chosen household?
How many children?
What are the ages of persons in your chosen household?
Does your household include pets? What type and how many?
Part 2 – Car Loan
You wish to purchase a new vehicle. Choose ONE of the following new cars that will satisfy the needs of your household.
Vehicle Options:
Ford Explorer XLT: $33,000 MSRP
GMC Yukon XL: $49,690 MSRP
FIAT 500L: $19,195 MSRP
Toyota Prius: $24,200 MSRP
Choose ONE of the two available financing options. Calculate your monthly payment using the Auto Calculator at bankrate.com (http://www.bankrate.com/calculators/auto/auto-loan-calculator.aspx).
Financing Options:
The car dealership offers 1.9% financing for 5 years.
Your bank or credit union offers 3.75% APR for a 6 year term.
Part 3 – Home Mortgage
You wish to own a home. Choose ONE of the following houses that will satisfy the needs of your household.
Housing Options:
2,450 square foot 4 bedroom/2.5 bath house: $195,000
1475 square foot 3 bedroom/1.5 bath house: $134,000
3,200 square foot 4 bedroom/3.5 bath house: $275,000
1750 square foot 3 bedroom/2 bath house: $170,000
Then choose ONE of the two available financing options. Calculate your monthly mortgage payment using the Mortgage Calculator at bankrate.com (http://www.bankrate.com/calculators/mortgages/mortgage-calculator.aspx).
Financing Options:
20-year mortgage at 3.8% APR with 20% down payment
30-year mortgage at 4.25% APR with 10% down payment
Part 4 – Household Budget
Create a budget using the monthly after tax income for your chosen household and incorporating the car loan and mortgage payments you calculated in Parts 2 and 3. Estimate and list all monthly expenses you will likely incur.
Include the following:
Mortgage payment
Car payment
Electricity and Water Bill
Gasoline
Food
Phone
Cable/Internet
Auto Insurance
Escrow payment (Homeowner’s Insurance and Property Taxes)
Clothing and Personal Care
Entertainment
Other – specify (examples: Child care? Pet food and supplies? Prescription Medications? School Supplies? Student Loans?)
You may change decisions you made in Parts 2 and 3 and recalculate your mortgage payment and car payment as needed, but you must stick with your choice from Part 1 and consider your household size when choosing your car and house.
For any items listed in a – k that you do not include in your budget, give a brief justification of why it was not.
Part 5 – Conclusion
Write 1 – 2 paragraphs evaluating your budget and summarizing any challenges you have faced in completing this project. You must include answers and incorporate your findings from parts 1 – 4 in your essay.
Also, include answers to these questions:
Will your monthly income be sufficient to cover your expenses?
If you have a surplus (money left over each month), what will you do with the surplus?
If you have a shortfall (too little money each month), how will you make up the difference?
Were your choices of car and house practical for your household size and income level? Why or why not?
How easy/difficult would it be to acquire the money needed for the down payment on the house you chose?
What ways can you think of to save money?
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