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Analyze a Financial Plan - MAT126

by Thomas
(Smith)










































The purpose of this Discussion is to analyze a financial plan that portrays a somewhat typical budgeting scheme. You will calculate expenses, a mortgage payment, and the effects of interest and financing on your budget. Show your math work for every answer and identify the answers with words.

Select the first three letters of your last name. Each letter has a numerical place value in the alphabet. For example, D is 4, L is 12, and Z is 26. Add the three place values together. For example, Wallace would yield WAL, which is 23+1+12 = 36.
Multiply your sum by 1500. This is your yearly income for Week Four Discussion 1.
Please use the following monthly expenses: Car payment = $283.15, Car insurance = $72, Utilities (includes water and power) = $242.77, Internet = $32, and Cell Phone = $79.95.
You also have a yearly educational bill of $7980 which includes textbooks and classes.
Calculate your monthly income.
What percent of your monthly income is the car payment?
Subtract the sum of your monthly expenses. Use this value to calculate what percent of your income is now available to spend for food, clothing, and your rent or mortgage.
Use the plan at the bottom of page 538, “Mathematics in Our World Revisited,” to calculate the monthly mortgage payment established by your monthly income.
Assume you can afford a down payment equal to 25% of your yearly income. What is the total purchase price can you afford for a home? Would this amount allow you to purchase a home in the area where you live?
Respond to at least two of your classmates’ postings. Make sure you review their calculations and let them know if their income seems sufficient to cover their monthly expenses.


LAST NAME SMITH

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May 11, 2012
Analyze a Financial Plan
by: Staff


Question:

by Thomas
(Smith)

The purpose of this Discussion is to analyze a financial plan that portrays a somewhat typical budgeting scheme. You will calculate expenses, a mortgage payment, and the effects of interest and financing on your budget. Show your math work for every answer and identify the answers with words.

Select the first three letters of your last name. Each letter has a numerical place value in the alphabet. For example, D is 4, L is 12, and Z is 26. Add the three place values together. For example, Wallace would yield WAL, which is 23+1+12 = 36.
Multiply your sum by 1500. This is your yearly income for Week Four Discussion 1.
Please use the following monthly expenses: Car payment = $283.15, Car insurance = $72, Utilities (includes water and power) = $242.77, Internet = $32, and Cell Phone = $79.95.
You also have a yearly educational bill of $7980 which includes textbooks and classes.
Calculate your monthly income.
What percent of your monthly income is the car payment?
Subtract the sum of your monthly expenses. Use this value to calculate what percent of your income is now available to spend for food, clothing, and your rent or mortgage.
Use the plan at the bottom of page 538, “Mathematics in Our World Revisited,” to calculate the monthly mortgage payment established by your monthly income.
Assume you can afford a down payment equal to 25% of your yearly income. What is the total purchase price can you afford for a home? Would this amount allow you to purchase a home in the area where you live?
Respond to at least two of your classmates’ postings. Make sure you review their calculations and let them know if their income seems sufficient to cover their monthly expenses.


LAST NAME SMITH



Answer:



Select the first three letters of your last name. Add the three place values together.

SMI
S (19th letter), M (13th letter), I (9th letter)

19 + 13 + 9 = 41

Multiply your sum by 1500.

41 * 1500 = 61500

Yearly income: $61,500

Monthly expenses:

Car payment = $283.15 per month
Car insurance = $72 per month
Utilities (includes water and power) = $242.77 per month
Internet = $32 per month
Cell Phone = $79.95 per month

Yearly educational bill (includes textbooks and classes): $7980
$7980/12 = $665 per month


Calculate your monthly income.

(Yearly income)/(12 months) = $61,500/(12 months) = $5,125 per month


What percent of your monthly income is the car payment?

[(Monthly car payment)/(Monthly income)] * 100 = % car payment

($283.15/$5,125)*100 = 5.52488 %

The monthly car payment is 5.5 % of the monthly income
-------------------------------------------------------


May 11, 2012
Analyze a Financial Plan
by: Staff

-------------------------------------------------------

Part II


Subtract the sum of your monthly expenses.

$5,125 per month, monthly income

-$283.15 per month, Car payment
-$72 per month, Car insurance
-$242.77 per month, Utilities (includes water and power)
-$32 per month, Internet
-$79.95 per month, Cell Phone
--------------------------------------
$4,415.13 per month (monthly income after monthly expenses, without educational expenses)

If educational expenses are included:

$4,415.13 per month
-$665 per month, educational expenses
--------------------------------------
$3,750.13 per month (monthly income after monthly expenses, including educational expenses)

---------

Calculate what percent of your income is now available to spend for food, clothing, and your rent or mortgage.

[(Monthly income after payments)/(Monthly income)] * 100 = % available

Without including educational expenses

($4,415.13 /$5,125)*100 = 86.1489 %

Available income is 86.1% of the monthly income.


Including educational expenses

($3,750.13 /$5,125)*100 = 73.1733%

Available income is 73.2% of the monthly income.


Assume you can afford a down payment equal to 25% of your yearly income.

$61,500 * .25 = $15,375 down payment


What is the total purchase price you can you afford for a home?
Mathematics in Our World Revisited
How Much Can You Afford to Pay for a Home?

Experts suggest that a person can afford to pay 28% of his or her gross monthly income for a home mortgage.

Given this assumption and using Table 9-1 on page 435, you can figure out how much you can afford to pay for a home, as shown.

28% of gross monthly income = .28*$5,125 = $1,435

You can afford a monthly mortgage payment of $1,435

Now to see what you can afford to borrow, look up the number corresponding to 7% and 25 years in Table 9-1 on page 435. It is 7.70. Set up an equation and solve for x.

7.70x = $1,435

X = $1,435/7.70 = 186.364

You can afford a mortgage of

186.364*1000 = $186,364

You can afford a mortgage of $186,364

Finally, add your down payment of $15,375

$186,364 + $15,375 = $201,739

Can purchase a home costing about $201,739

(NOTE: there is something left out of these calculations – taxes and insurance. Taxes and insurance will probably ad another $300 to $400 per month.

However, I am going to ignore the taxes and insurance. I will answer the last question based on the $201,739 figure.)


Would this amount allow you to purchase a home in the area where you live?
According to your IP (I’ll assume it is not a proxy IP address), you live in Thomaston, Georgia.
Thomaston, Georgia (zip code: 30286)

Yes

With a monthly income of $5,125 you can easily afford a home in Thomaston, Georgia.

To see listings of homes in that area, open the following link:

http://www.zillow.com/homes/30286_rb/




Thanks for writing.

Staff
www.solving-math-problems.com


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