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Math 126 - Analyze a Financial Plan

by Lia
(Sacramento, CA, USA)












































1. Week Four Discussion 1

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.
1. 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.
K=11
E=5
L=12
11+5+12=28
2. Multiply your sum by 1500. This is your yearly income for Week Four Discussion 1.
1550X28=42,000
Yearly income is $42,000.00
3. 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.
Car-$283.15
Insurance-$72.00
Utilities-$242.77
Internet-$32.00
Phone-$79.95


4. You also have a yearly educational bill of $7980 which includes textbooks and classes.
Education Bill –Yearly Educational Expense-$7980.00
5. Calculate your monthly income.
3500.00 monthy income
6. What percent of your monthly income is the car payment?
283.15/3,500=0.0809x100=8.09%
8.09% of my monthly income is my truck payment
7. 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.
Total expenses;
Car pymt-283.15
Insurance-72.00
Utilities-242.77
Internet-32.00
Cell-79.95
Education expwnse-665.00
Total Monthy Expense:1374.87
1374.87/3500=0.39282x27.55
10.8

8. 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.
Monthly Income is 3500.00
.28X3500=980.00
$980.00 would be my calculated monthly house payment for my monthly income calculated

9. Assume you can afford a down payment equal to 25% of your yearly income. Yearly income is 3500.00x12=42,000.00 yearly income. Down payment of 25% of my yearly income is 11,250.00 dollars.
The equation would be to find the answer is


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?
10. 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.

Comments for Math 126 - Analyze a Financial Plan

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Sep 16, 2012
Financial Plan
by: Staff



Answer:


Part I

Hi Lia,


There are a few changes you should make, beginning with Item 7:


Subtract the sum of your monthly expenses.

$3,500 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
--------------------------------------
$2790.13 per month (monthly income after monthly expenses, without including educational expenses)

If educational expenses are included:

$2790.13 per month
-$665 per month, educational expenses
--------------------------------------
$2125.13 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

($2790.13 /$3500)*100 = 79.718 %

Available income is 79.7 % of the monthly income.


Including educational expenses

($2125.13 /$3500)*100 = 60.718 %

Available income is 60.7 % of the monthly income.


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

($2790.13 /$3500)*100 = 79.718 %

Available income is 79.7 % of the monthly income.


Including educational expenses

($2125.13 /$3500)*100 = 60.718 %

Available income is 60.7 % of the monthly income.


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

$42000 * .25 = $10,500 down payment

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



Sep 16, 2012
Financial Plan
by: Staff


--------------------------------------
Part II


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*$3500 = $980

You can afford a monthly mortgage payment of $980


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 = $980

X = $980/7.70 = 127.273

You can afford a mortgage of

127.273*1000 = $127,273

You can afford a mortgage of $127,273

Finally, add your down payment of $10,500

$127,273 + $10,500 = $137,773

Can purchase a home costing about $137,773


Would this amount allow you to purchase a home in the area where you live?

You live in Sacramento, CA

Clarksville, Tennessee (zip code: 37043 )

Yes

With a monthly income of $3,500 you can afford a home in Sacramento.

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

http://www.zillow.com/homes/sacramento,-ca_rb/



Thanks for writing.

Staff
www.solving-math-problems.com



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