Free Essay

Wake Up & Smell the Coffee

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Submitted By abhisahara
Words 5729
Pages 23
1. Based on the information provided in Table 1, if the Halls continue making minimum payments on their outstanding debts, how much money will they have left over for all other expenses?

| AnnualSalary | Net MonthlyPay | | | (inclusive of | | | 28% Income | | | Tax) | Marty's Salary | | | | $50,000 | $3,000 | Laura's Salary | | | | 25,000 | 1,500 | Total Take home pay | | | | | $4,500 | Monthly Expenses: | Term | Balance | Rate | Monthly | | | | | | Payment | | Car Loan Payment | 2 years | $5,000 | 5.99% | $221.58 | | College Loan Payment | 2 years | 12,000 | 5.25% | 527.80 | | Credit Card Payment | - | 10,000 | 15.99% | 300 | | (Minimum monthly payment required on credit | | | | | | card debt is 3% of balance owed.) | | | | | | Rent | | | | 1,200 | $2,249.38 | Money Left-over for other expenses | | | | | $2,250.62 |

2. How much money will Laura and Marty have to deposit each month (beginning one month after she is born and ending when she turns 18) in order to have enough saved up for their child’s education. Assume that the yield on investments is 8% per year, college expenses increase at the rate of 4% per year, and that their child will enter college when he or she turns
18 and will complete the degree in 4 years.

Annual Yield of InvestmentYears until child reaches college | | 8%18 years | | Current Annual College Expenses | | $20,000 | | Inflation Rate | | 4% | | Years in college | | 4 | | | Computation | | | College Expense (1st Year) | 20,000 x 1.0418 | | $40,516.33 | College Expense (2nd Year) | 20,000 x 1.0419 | | 42,136.98 | College Expense (3rd Year) | 20,000 x 1.0420 | | 43,822.46 | College Expense (4th Year) | 20,000 x 1.0421 | | 45,575.36 | Accumulated Savings Required | | | 172,051.13(PV=153,281.95) | Monthly Deposits Required PMT= PV/ [((1+I)N – 1)/I] $319.38

3. How much money will the Hall’s have to set aside each month so as to have enough saved up for a down payment on the $140,000 house within 12 months? Assume that the closing costs amount to 2% of the loan balance and than the down payment is 10% of the price. Note: Annual rate of return on investment is 12%.

Purchase Price of House
(assumed to be the same after 12 months)

Computation

$140,000

10% Down Payment 140,000 x 10% (14,000) Loan Amount after Down Payment 126,000 Closing Costs 126,000 x 2% (2,520)

Total Money needed to be saved for Down
Payment and Closing Costs

14,000 (Downpayment) +
16,520
2,520 (Closing Cost)

Number of months until purchase of house 12 months

Annual Rate (Interest) 8%

Future Value = 16,520 Interest = 8%/12 months Number of payments = 12
Monthly deposits required to accumulate total closing costs $1,326.92

 The Hall’s needs $1326.92 each month so as to have saved up for a down payment on the $140,000 house within 12 months.

4. If the interest rate on a 30-year mortgage is at 5% per year when the Hall’s purchase their house, how much will their mortgage payment be? Ignore insurance and taxes. Present Value = 126,000
Mortgage Rate = 5%

Mortgage Term (years) = 30

Monthly Payment = $676.40

Solution:

5. Construct an amortization schedule for the 5%, 30-year mortgage. | Month | BeginningPrincipal Balance | Payment | Interest | Payment toPrincipal | OutstandingBalance | 1 | 126,000 | ($676.40) | $ 525.00 | ($151.40) | $125,848.60 | 2 | $125,848.60 | ($676.40) | $ 524.37 | ($152.03) | $125,696.58 | 3 | $125,696.58 | ($676.40) | $ 523.74 | ($152.66) | $125,543.92 | 4 | $125,543.92 | ($676.40) | $ 523.10 | ($153.30) | $125,390.62 | 5 | $125,390.62 | ($676.40) | $ 522.46 | ($153.93) | $125,236.69 | 6 | $125,236.69 | ($676.40) | $ 521.82 | ($154.58) | $125,082.11 | 7 | $125,082.11 | ($676.40) | $ 521.18 | ($155.22) | $124,926.89 | 8 | $124,926.89 | ($676.40) | $ 520.53 | ($155.87) | $124,771.03 | 9 | $124,771.03 | ($676.40) | $ 519.88 | ($156.52) | $124,614.51 | 10 | $124,614.51 | ($676.40) | $ 519.23 | ($157.17) | $124,457.34 | 11 | $124,457.34 | ($676.40) | $ 518.57 | ($157.82) | $124,299.52 | 12 | $124,299.52 | ($676.40) | $ 517.91 | ($158.48) | $124,141.04 | 13 | $124,141.04 | ($676.40) | $ 517.25 | ($159.14) | $123,981.90 | 14 | $123,981.90 | ($676.40) | $ 516.59 | ($159.80) | $123,822.09 | 15 | $123,822.09 | ($676.40) | $ 515.93 | ($160.47) | $123,661.62 | 16 | $123,661.62 | ($676.40) | $ 515.26 | ($161.14) | $123,500.49 | 17 | $123,500.49 | ($676.40) | $ 514.59 | ($161.81) | $123,338.68 | 18 | $123,338.68 | ($676.40) | $ 513.91 | ($162.48) | $123,176.19 | 19 | $123,176.19 | ($676.40) | $ 513.23 | ($163.16) | $123,013.03 | 20 | $123,013.03 | ($676.40) | $ 512.55 | ($163.84) | $122,849.19 | 21 | $122,849.19 | ($676.40) | $ 511.87 | ($164.52) | $122,684.67 | 22 | $122,684.67 | ($676.40) | $ 511.19 | ($165.21) | $122,519.46 | 23 | $122,519.46 | ($676.40) | $ 510.50 | ($165.90) | $122,353.56 | 24 | $122,353.56 | ($676.40) | $ 509.81 | ($166.59) | $122,186.97 | 25 | $122,186.97 | ($676.40) | $ 509.11 | ($167.28) | $122,019.69 | 26 | $122,019.69 | ($676.40) | $ 508.42 | ($167.98) | $121,851.71 | 27 | $121,851.71 | ($676.40) | $ 507.72 | ($168.68) | $121,683.03 | 28 | $121,683.03 | ($676.40) | $ 507.01 | ($169.38) | $121,513.65 | 29 | $121,513.65 | ($676.40) | $ 506.31 | ($170.09) | $121,343.56 | 30 | $121,343.56 | ($676.40) | $ 505.60 | ($170.80) | $121,172.76 | 31 | $121,172.76 | ($676.40) | $ 504.89 | ($171.51) | $121,001.25 | 32 | $121,001.25 | ($676.40) | $ 504.17 | ($172.22) | $120,829.03 | 33 | $120,829.03 | ($676.40) | $ 503.45 | ($172.94) | $120,656.09 | 34 | $120,656.09 | ($676.40) | $ 502.73 | ($173.66) | $120,482.43 | 35 | $120,482.43 | ($676.40) | $ 502.01 | ($174.39) | $120,308.04 | 36 | $120,308.04 | ($676.40) | $ 501.28 | ($175.11) | $120,132.93 | 37 | $120,132.93 | ($676.40) | $ 500.55 | ($175.84) | $119,957.09 | 38 | $119,957.09 | ($676.40) | $ 499.82 | ($176.57) | $119,780.51 | 39 | $119,780.51 | ($676.40) | $ 499.09 | ($177.31) | $119,603.20 | 40 | $119,603.20 | ($676.40) | $ 498.35 | ($178.05) | $119,425.16 | 41 | $119,425.16 | ($676.40) | $ 497.60 | ($178.79) | $119,246.37 | 42 | $119,246.37 | ($676.40) | $ 496.86 | ($179.54) | $119,066.83 | 43 | $119,066.83 | ($676.40) | $ 496.11 | ($180.28) | $118,886.55 |

44 | $118,886.55 | ($676.40) | $ 495.36 | ($181.03) | $118,705.51 | 45 | $118,705.51 | ($676.40) | $ 494.61 | ($181.79) | $118,523.72 | 46 | $118,523.72 | ($676.40) | $ 493.85 | ($182.55) | $118,341.18 | 47 | $118,341.18 | ($676.40) | $ 493.09 | ($183.31) | $118,157.87 | 48 | $118,157.87 | ($676.40) | $ 492.32 | ($184.07) | $117,973.80 | 49 | $117,973.80 | ($676.40) | $ 491.56 | ($184.84) | $117,788.96 | 50 | $117,788.96 | ($676.40) | $ 490.79 | ($185.61) | $117,603.35 | 51 | $117,603.35 | ($676.40) | $ 490.01 | ($186.38) | $117,416.97 | 52 | $117,416.97 | ($676.40) | $ 489.24 | ($187.16) | $117,229.81 | 53 | $117,229.81 | ($676.40) | $ 488.46 | ($187.94) | $117,041.88 | 54 | $117,041.88 | ($676.40) | $ 487.67 | ($188.72) | $116,853.16 | 55 | $116,853.16 | ($676.40) | $ 486.89 | ($189.51) | $116,663.65 | 56 | $116,663.65 | ($676.40) | $ 486.10 | ($190.30) | $116,473.35 | 57 | $116,473.35 | ($676.40) | $ 485.31 | ($191.09) | $116,282.26 | 58 | $116,282.26 | ($676.40) | $ 484.51 | ($191.89) | $116,090.38 | 59 | $116,090.38 | ($676.40) | $ 483.71 | ($192.69) | $115,897.69 | 60 | $115,897.69 | ($676.40) | $ 482.91 | ($193.49) | $115,704.20 | 61 | $115,704.20 | ($676.40) | $ 482.10 | ($194.29) | $115,509.91 | 62 | $115,509.91 | ($676.40) | $ 481.29 | ($195.10) | $115,314.80 | 63 | $115,314.80 | ($676.40) | $ 480.48 | ($195.92) | $115,118.89 | 64 | $115,118.89 | ($676.40) | $ 479.66 | ($196.73) | $114,922.15 | 65 | $114,922.15 | ($676.40) | $ 478.84 | ($197.55) | $114,724.60 | 66 | $114,724.60 | ($676.40) | $ 478.02 | ($198.38) | $114,526.22 | 67 | $114,526.22 | ($676.40) | $ 477.19 | ($199.20) | $114,327.02 | 68 | $114,327.02 | ($676.40) | $ 476.36 | ($200.03) | $114,126.99 | 69 | $114,126.99 | ($676.40) | $ 475.53 | ($200.87) | $113,926.12 | 70 | $113,926.12 | ($676.40) | $ 474.69 | ($201.70) | $113,724.42 | 71 | $113,724.42 | ($676.40) | $ 473.85 | ($202.54) | $113,521.88 | 72 | $113,521.88 | ($676.40) | $ 473.01 | ($203.39) | $113,318.49 | 73 | $113,318.49 | ($676.40) | $ 472.16 | ($204.23) | $113,114.25 | 74 | $113,114.25 | ($676.40) | $ 471.31 | ($205.09) | $112,909.17 | 75 | $112,909.17 | ($676.40) | $ 470.45 | ($205.94) | $112,703.23 | 76 | $112,703.23 | ($676.40) | $ 469.60 | ($206.80) | $112,496.43 | 77 | $112,496.43 | ($676.40) | $ 468.74 | ($207.66) | $112,288.77 | 78 | $112,288.77 | ($676.40) | $ 467.87 | ($208.53) | $112,080.24 | 79 | $112,080.24 | ($676.40) | $ 467.00 | ($209.39) | $111,870.85 | 80 | $111,870.85 | ($676.40) | $ 466.13 | ($210.27) | $111,660.58 | 81 | $111,660.58 | ($676.40) | $ 465.25 | ($211.14) | $111,449.44 | 82 | $111,449.44 | ($676.40) | $ 464.37 | ($212.02) | $111,237.42 | 83 | $111,237.42 | ($676.40) | $ 463.49 | ($212.91) | $111,024.51 | 84 | $111,024.51 | ($676.40) | $ 462.60 | ($213.79) | $110,810.72 | 85 | $110,810.72 | ($676.40) | $ 461.71 | ($214.68) | $110,596.04 | 86 | $110,596.04 | ($676.40) | $ 460.82 | ($215.58) | $110,380.46 | 87 | $110,380.46 | ($676.40) | $ 459.92 | ($216.48) | $110,163.98 | 88 | $110,163.98 | ($676.40) | $ 459.02 | ($217.38) | $109,946.60 | 89 | $109,946.60 | ($676.40) | $ 458.11 | ($218.28) | $109,728.32 |

90 | $109,728.32 | ($676.40) | $ 457.20 | ($219.19) | $109,509.12 | 91 | $109,509.12 | ($676.40) | $ 456.29 | ($220.11) | $109,289.02 | 92 | $109,289.02 | ($676.40) | $ 455.37 | ($221.02) | $109,067.99 | 93 | $109,067.99 | ($676.40) | $ 454.45 | ($221.95) | $108,846.05 | 94 | $108,846.05 | ($676.40) | $ 453.53 | ($222.87) | $108,623.18 | 95 | $108,623.18 | ($676.40) | $ 452.60 | ($223.80) | $108,399.38 | 96 | $108,399.38 | ($676.40) | $ 451.66 | ($224.73) | $108,174.65 | 97 | $108,174.65 | ($676.40) | $ 450.73 | ($225.67) | $107,948.98 | 98 | $107,948.98 | ($676.40) | $ 449.79 | ($226.61) | $107,722.37 | 99 | $107,722.37 | ($676.40) | $ 448.84 | ($227.55) | $107,494.82 | 100 | $107,494.82 | ($676.40) | $ 447.90 | ($228.50) | $107,266.32 | 101 | $107,266.32 | ($676.40) | $ 446.94 | ($229.45) | $107,036.87 | 102 | $107,036.87 | ($676.40) | $ 445.99 | ($230.41) | $106,806.46 | 103 | $106,806.46 | ($676.40) | $ 445.03 | ($231.37) | $106,575.09 | 104 | $106,575.09 | ($676.40) | $ 444.06 | ($232.33) | $106,342.76 | 105 | $106,342.76 | ($676.40) | $ 443.09 | ($233.30) | $106,109.46 | 106 | $106,109.46 | ($676.40) | $ 442.12 | ($234.27) | $105,875.18 | 107 | $105,875.18 | ($676.40) | $ 441.15 | ($235.25) | $105,639.94 | 108 | $105,639.94 | ($676.40) | $ 440.17 | ($236.23) | $105,403.71 | 109 | $105,403.71 | ($676.40) | $ 439.18 | ($237.21) | $105,166.49 | 110 | $105,166.49 | ($676.40) | $ 438.19 | ($238.20) | $104,928.29 | 111 | $104,928.29 | ($676.40) | $ 437.20 | ($239.19) | $104,689.10 | 112 | $104,689.10 | ($676.40) | $ 436.20 | ($240.19) | $104,448.91 | 113 | $104,448.91 | ($676.40) | $ 435.20 | ($241.19) | $104,207.72 | 114 | $104,207.72 | ($676.40) | $ 434.20 | ($242.20) | $103,965.52 | 115 | $103,965.52 | ($676.40) | $ 433.19 | ($243.21) | $103,722.31 | 116 | $103,722.31 | ($676.40) | $ 432.18 | ($244.22) | $103,478.10 | 117 | $103,478.10 | ($676.40) | $ 431.16 | ($245.24) | $103,232.86 | 118 | $103,232.86 | ($676.40) | $ 430.14 | ($246.26) | $102,986.60 | 119 | $102,986.60 | ($676.40) | $ 429.11 | ($247.28) | $102,739.32 | 120 | $102,739.32 | ($676.40) | $ 428.08 | ($248.31) | $102,491.00 | 121 | $102,491.00 | ($676.40) | $ 427.05 | ($249.35) | $102,241.65 | 122 | $102,241.65 | ($676.40) | $ 426.01 | ($250.39) | $101,991.26 | 123 | $101,991.26 | ($676.40) | $ 424.96 | ($251.43) | $101,739.83 | 124 | $101,739.83 | ($676.40) | $ 423.92 | ($252.48) | $101,487.35 | 125 | $101,487.35 | ($676.40) | $ 422.86 | ($253.53) | $101,233.82 | 126 | $101,233.82 | ($676.40) | $ 421.81 | ($254.59) | $100,979.23 | 127 | $100,979.23 | ($676.40) | $ 420.75 | ($255.65) | $100,723.59 | 128 | $100,723.59 | ($676.40) | $ 419.68 | ($256.71) | $100,466.87 | 129 | $100,466.87 | ($676.40) | $ 418.61 | ($257.78) | $100,209.09 | 130 | $100,209.09 | ($676.40) | $ 417.54 | ($258.86) | $99,950.23 | 131 | $99,950.23 | ($676.40) | $ 416.46 | ($259.94) | $99,690.29 | 132 | $99,690.29 | ($676.40) | $ 415.38 | ($261.02) | $99,429.28 | 133 | $99,429.28 | ($676.40) | $ 414.29 | ($262.11) | $99,167.17 | 134 | $99,167.17 | ($676.40) | $ 413.20 | ($263.20) | $98,903.97 | 135 | $98,903.97 | ($676.40) | $ 412.10 | ($264.30) | $98,639.68 |

136 | $98,639.68 | ($676.40) | $ 411.00 | ($265.40) | $98,374.28 | 137 | $98,374.28 | ($676.40) | $ 409.89 | ($266.50) | $98,107.78 | 138 | $98,107.78 | ($676.40) | $ 408.78 | ($267.61) | $97,840.16 | 139 | $97,840.16 | ($676.40) | $ 407.67 | ($268.73) | $97,571.44 | 140 | $97,571.44 | ($676.40) | $ 406.55 | ($269.85) | $97,301.59 | 141 | $97,301.59 | ($676.40) | $ 405.42 | ($270.97) | $97,030.62 | 142 | $97,030.62 | ($676.40) | $ 404.29 | ($272.10) | $96,758.51 | 143 | $96,758.51 | ($676.40) | $ 403.16 | ($273.23) | $96,485.28 | 144 | $96,485.28 | ($676.40) | $ 402.02 | ($274.37) | $96,210.91 | 145 | $96,210.91 | ($676.40) | $ 400.88 | ($275.52) | $95,935.39 | 146 | $95,935.39 | ($676.40) | $ 399.73 | ($276.66) | $95,658.73 | 147 | $95,658.73 | ($676.40) | $ 398.58 | ($277.82) | $95,380.91 | 148 | $95,380.91 | ($676.40) | $ 397.42 | ($278.97) | $95,101.93 | 149 | $95,101.93 | ($676.40) | $ 396.26 | ($280.14) | $94,821.80 | 150 | $94,821.80 | ($676.40) | $ 395.09 | ($281.30) | $94,540.49 | 151 | $94,540.49 | ($676.40) | $ 393.92 | ($282.48) | $94,258.02 | 152 | $94,258.02 | ($676.40) | $ 392.74 | ($283.65) | $93,974.36 | 153 | $93,974.36 | ($676.40) | $ 391.56 | ($284.84) | $93,689.53 | 154 | $93,689.53 | ($676.40) | $ 390.37 | ($286.02) | $93,403.50 | 155 | $93,403.50 | ($676.40) | $ 389.18 | ($287.21) | $93,116.29 | 156 | $93,116.29 | ($676.40) | $ 387.98 | ($288.41) | $92,827.88 | 157 | $92,827.88 | ($676.40) | $ 386.78 | ($289.61) | $92,538.27 | 158 | $92,538.27 | ($676.40) | $ 385.58 | ($290.82) | $92,247.45 | 159 | $92,247.45 | ($676.40) | $ 384.36 | ($292.03) | $91,955.42 | 160 | $91,955.42 | ($676.40) | $ 383.15 | ($293.25) | $91,662.17 | 161 | $91,662.17 | ($676.40) | $ 381.93 | ($294.47) | $91,367.70 | 162 | $91,367.70 | ($676.40) | $ 380.70 | ($295.70) | $91,072.00 | 163 | $91,072.00 | ($676.40) | $ 379.47 | ($296.93) | $90,775.08 | 164 | $90,775.08 | ($676.40) | $ 378.23 | ($298.17) | $90,476.91 | 165 | $90,476.91 | ($676.40) | $ 376.99 | ($299.41) | $90,177.50 | 166 | $90,177.50 | ($676.40) | $ 375.74 | ($300.66) | $89,876.85 | 167 | $89,876.85 | ($676.40) | $ 374.49 | ($301.91) | $89,574.94 | 168 | $89,574.94 | ($676.40) | $ 373.23 | ($303.17) | $89,271.77 | 169 | $89,271.77 | ($676.40) | $ 371.97 | ($304.43) | $88,967.34 | 170 | $88,967.34 | ($676.40) | $ 370.70 | ($305.70) | $88,661.64 | 171 | $88,661.64 | ($676.40) | $ 369.42 | ($306.97) | $88,354.67 | 172 | $88,354.67 | ($676.40) | $ 368.14 | ($308.25) | $88,046.42 | 173 | $88,046.42 | ($676.40) | $ 366.86 | ($309.54) | $87,736.89 | 174 | $87,736.89 | ($676.40) | $ 365.57 | ($310.82) | $87,426.06 | 175 | $87,426.06 | ($676.40) | $ 364.28 | ($312.12) | $87,113.94 | 176 | $87,113.94 | ($676.40) | $ 362.97 | ($313.42) | $86,800.52 | 177 | $86,800.52 | ($676.40) | $ 361.67 | ($314.73) | $86,485.79 | 178 | $86,485.79 | ($676.40) | $ 360.36 | ($316.04) | $86,169.76 | 179 | $86,169.76 | ($676.40) | $ 359.04 | ($317.35) | $85,852.40 | 180 | $85,852.40 | ($676.40) | $ 357.72 | ($318.68) | $85,533.72 | 181 | $85,533.72 | ($676.40) | $ 356.39 | ($320.00) | $85,213.72 |

182 | $85,213.72 | ($676.40) | $ 355.06 | ($321.34) | $84,892.38 | 183 | $84,892.38 | ($676.40) | $ 353.72 | ($322.68) | $84,569.71 | 184 | $84,569.71 | ($676.40) | $ 352.37 | ($324.02) | $84,245.68 | 185 | $84,245.68 | ($676.40) | $ 351.02 | ($325.37) | $83,920.31 | 186 | $83,920.31 | ($676.40) | $ 349.67 | ($326.73) | $83,593.58 | 187 | $83,593.58 | ($676.40) | $ 348.31 | ($328.09) | $83,265.50 | 188 | $83,265.50 | ($676.40) | $ 346.94 | ($329.46) | $82,936.04 | 189 | $82,936.04 | ($676.40) | $ 345.57 | ($330.83) | $82,605.21 | 190 | $82,605.21 | ($676.40) | $ 344.19 | ($332.21) | $82,273.01 | 191 | $82,273.01 | ($676.40) | $ 342.80 | ($333.59) | $81,939.41 | 192 | $81,939.41 | ($676.40) | $ 341.41 | ($334.98) | $81,604.43 | 193 | $81,604.43 | ($676.40) | $ 340.02 | ($336.38) | $81,268.06 | 194 | $81,268.06 | ($676.40) | $ 338.62 | ($337.78) | $80,930.28 | 195 | $80,930.28 | ($676.40) | $ 337.21 | ($339.19) | $80,591.09 | 196 | $80,591.09 | ($676.40) | $ 335.80 | ($340.60) | $80,250.49 | 197 | $80,250.49 | ($676.40) | $ 334.38 | ($342.02) | $79,908.48 | 198 | $79,908.48 | ($676.40) | $ 332.95 | ($343.44) | $79,565.03 | 199 | $79,565.03 | ($676.40) | $ 331.52 | ($344.87) | $79,220.16 | 200 | $79,220.16 | ($676.40) | $ 330.08 | ($346.31) | $78,873.85 | 201 | $78,873.85 | ($676.40) | $ 328.64 | ($347.75) | $78,526.09 | 202 | $78,526.09 | ($676.40) | $ 327.19 | ($349.20) | $78,176.89 | 203 | $78,176.89 | ($676.40) | $ 325.74 | ($350.66) | $77,826.23 | 204 | $77,826.23 | ($676.40) | $ 324.28 | ($352.12) | $77,474.11 | 205 | $77,474.11 | ($676.40) | $ 322.81 | ($353.59) | $77,120.52 | 206 | $77,120.52 | ($676.40) | $ 321.34 | ($355.06) | $76,765.47 | 207 | $76,765.47 | ($676.40) | $ 319.86 | ($356.54) | $76,408.93 | 208 | $76,408.93 | ($676.40) | $ 318.37 | ($358.02) | $76,050.90 | 209 | $76,050.90 | ($676.40) | $ 316.88 | ($359.52) | $75,691.38 | 210 | $75,691.38 | ($676.40) | $ 315.38 | ($361.01) | $75,330.37 | 211 | $75,330.37 | ($676.40) | $ 313.88 | ($362.52) | $74,967.85 | 212 | $74,967.85 | ($676.40) | $ 312.37 | ($364.03) | $74,603.82 | 213 | $74,603.82 | ($676.40) | $ 310.85 | ($365.55) | $74,238.28 | 214 | $74,238.28 | ($676.40) | $ 309.33 | ($367.07) | $73,871.21 | 215 | $73,871.21 | ($676.40) | $ 307.80 | ($368.60) | $73,502.61 | 216 | $73,502.61 | ($676.40) | $ 306.26 | ($370.13) | $73,132.47 | 217 | $73,132.47 | ($676.40) | $ 304.72 | ($371.68) | $72,760.80 | 218 | $72,760.80 | ($676.40) | $ 303.17 | ($373.23) | $72,387.57 | 219 | $72,387.57 | ($676.40) | $ 301.61 | ($374.78) | $72,012.79 | 220 | $72,012.79 | ($676.40) | $ 300.05 | ($376.34) | $71,636.45 | 221 | $71,636.45 | ($676.40) | $ 298.49 | ($377.91) | $71,258.54 | 222 | $71,258.54 | ($676.40) | $ 296.91 | ($379.48) | $70,879.06 | 223 | $70,879.06 | ($676.40) | $ 295.33 | ($381.07) | $70,497.99 | 224 | $70,497.99 | ($676.40) | $ 293.74 | ($382.65) | $70,115.34 | 225 | $70,115.34 | ($676.40) | $ 292.15 | ($384.25) | $69,731.09 | 226 | $69,731.09 | ($676.40) | $ 290.55 | ($385.85) | $69,345.24 | 227 | $69,345.24 | ($676.40) | $ 288.94 | ($387.46) | $68,957.78 |

228 | $68,957.78 | ($676.40) | $ 287.32 | ($389.07) | $68,568.71 | 229 | $68,568.71 | ($676.40) | $ 285.70 | ($390.69) | $68,178.02 | 230 | $68,178.02 | ($676.40) | $ 284.08 | ($392.32) | $67,785.70 | 231 | $67,785.70 | ($676.40) | $ 282.44 | ($393.95) | $67,391.74 | 232 | $67,391.74 | ($676.40) | $ 280.80 | ($395.60) | $66,996.15 | 233 | $66,996.15 | ($676.40) | $ 279.15 | ($397.24) | $66,598.90 | 234 | $66,598.90 | ($676.40) | $ 277.50 | ($398.90) | $66,200.00 | 235 | $66,200.00 | ($676.40) | $ 275.83 | ($400.56) | $65,799.44 | 236 | $65,799.44 | ($676.40) | $ 274.16 | ($402.23) | $65,397.21 | 237 | $65,397.21 | ($676.40) | $ 272.49 | ($403.91) | $64,993.30 | 238 | $64,993.30 | ($676.40) | $ 270.81 | ($405.59) | $64,587.71 | 239 | $64,587.71 | ($676.40) | $ 269.12 | ($407.28) | $64,180.43 | 240 | $64,180.43 | ($676.40) | $ 267.42 | ($408.98) | $63,771.46 | 241 | $63,771.46 | ($676.40) | $ 265.71 | ($410.68) | $63,360.78 | 242 | $63,360.78 | ($676.40) | $ 264.00 | ($412.39) | $62,948.38 | 243 | $62,948.38 | ($676.40) | $ 262.28 | ($414.11) | $62,534.27 | 244 | $62,534.27 | ($676.40) | $ 260.56 | ($415.84) | $62,118.44 | 245 | $62,118.44 | ($676.40) | $ 258.83 | ($417.57) | $61,700.87 | 246 | $61,700.87 | ($676.40) | $ 257.09 | ($419.31) | $61,281.56 | 247 | $61,281.56 | ($676.40) | $ 255.34 | ($421.06) | $60,860.51 | 248 | $60,860.51 | ($676.40) | $ 253.59 | ($422.81) | $60,437.70 | 249 | $60,437.70 | ($676.40) | $ 251.82 | ($424.57) | $60,013.12 | 250 | $60,013.12 | ($676.40) | $ 250.05 | ($426.34) | $59,586.78 | 251 | $59,586.78 | ($676.40) | $ 248.28 | ($428.12) | $59,158.67 | 252 | $59,158.67 | ($676.40) | $ 246.49 | ($429.90) | $58,728.77 | 253 | $58,728.77 | ($676.40) | $ 244.70 | ($431.69) | $58,297.07 | 254 | $58,297.07 | ($676.40) | $ 242.90 | ($433.49) | $57,863.58 | 255 | $57,863.58 | ($676.40) | $ 241.10 | ($435.30) | $57,428.29 | 256 | $57,428.29 | ($676.40) | $ 239.28 | ($437.11) | $56,991.18 | 257 | $56,991.18 | ($676.40) | $ 237.46 | ($438.93) | $56,552.24 | 258 | $56,552.24 | ($676.40) | $ 235.63 | ($440.76) | $56,111.48 | 259 | $56,111.48 | ($676.40) | $ 233.80 | ($442.60) | $55,668.89 | 260 | $55,668.89 | ($676.40) | $ 231.95 | ($444.44) | $55,224.44 | 261 | $55,224.44 | ($676.40) | $ 230.10 | ($446.29) | $54,778.15 | 262 | $54,778.15 | ($676.40) | $ 228.24 | ($448.15) | $54,330.00 | 263 | $54,330.00 | ($676.40) | $ 226.37 | ($450.02) | $53,879.98 | 264 | $53,879.98 | ($676.40) | $ 224.50 | ($451.90) | $53,428.08 | 265 | $53,428.08 | ($676.40) | $ 222.62 | ($453.78) | $52,974.30 | 266 | $52,974.30 | ($676.40) | $ 220.73 | ($455.67) | $52,518.63 | 267 | $52,518.63 | ($676.40) | $ 218.83 | ($457.57) | $52,061.07 | 268 | $52,061.07 | ($676.40) | $ 216.92 | ($459.47) | $51,601.59 | 269 | $51,601.59 | ($676.40) | $ 215.01 | ($461.39) | $51,140.20 | 270 | $51,140.20 | ($676.40) | $ 213.08 | ($463.31) | $50,676.89 | 271 | $50,676.89 | ($676.40) | $ 211.15 | ($465.24) | $50,211.65 | 272 | $50,211.65 | ($676.40) | $ 209.22 | ($467.18) | $49,744.47 | 273 | $49,744.47 | ($676.40) | $ 207.27 | ($469.13) | $49,275.35 |

274 | $49,275.35 | ($676.40) | $ 205.31 | ($471.08) | $48,804.26 | 275 | $48,804.26 | ($676.40) | $ 203.35 | ($473.04) | $48,331.22 | 276 | $48,331.22 | ($676.40) | $ 201.38 | ($475.02) | $47,856.20 | 277 | $47,856.20 | ($676.40) | $ 199.40 | ($476.99) | $47,379.21 | 278 | $47,379.21 | ($676.40) | $ 197.41 | ($478.98) | $46,900.23 | 279 | $46,900.23 | ($676.40) | $ 195.42 | ($480.98) | $46,419.25 | 280 | $46,419.25 | ($676.40) | $ 193.41 | ($482.98) | $45,936.27 | 281 | $45,936.27 | ($676.40) | $ 191.40 | ($484.99) | $45,451.27 | 282 | $45,451.27 | ($676.40) | $ 189.38 | ($487.01) | $44,964.26 | 283 | $44,964.26 | ($676.40) | $ 187.35 | ($489.04) | $44,475.22 | 284 | $44,475.22 | ($676.40) | $ 185.31 | ($491.08) | $43,984.13 | 285 | $43,984.13 | ($676.40) | $ 183.27 | ($493.13) | $43,491.01 | 286 | $43,491.01 | ($676.40) | $ 181.21 | ($495.18) | $42,995.82 | 287 | $42,995.82 | ($676.40) | $ 179.15 | ($497.25) | $42,498.58 | 288 | $42,498.58 | ($676.40) | $ 177.08 | ($499.32) | $41,999.26 | 289 | $41,999.26 | ($676.40) | $ 175.00 | ($501.40) | $41,497.86 | 290 | $41,497.86 | ($676.40) | $ 172.91 | ($503.49) | $40,994.37 | 291 | $40,994.37 | ($676.40) | $ 170.81 | ($505.59) | $40,488.79 | 292 | $40,488.79 | ($676.40) | $ 168.70 | ($507.69) | $39,981.10 | 293 | $39,981.10 | ($676.40) | $ 166.59 | ($509.81) | $39,471.29 | 294 | $39,471.29 | ($676.40) | $ 164.46 | ($511.93) | $38,959.36 | 295 | $38,959.36 | ($676.40) | $ 162.33 | ($514.06) | $38,445.29 | 296 | $38,445.29 | ($676.40) | $ 160.19 | ($516.21) | $37,929.09 | 297 | $37,929.09 | ($676.40) | $ 158.04 | ($518.36) | $37,410.73 | 298 | $37,410.73 | ($676.40) | $ 155.88 | ($520.52) | $36,890.21 | 299 | $36,890.21 | ($676.40) | $ 153.71 | ($522.69) | $36,367.53 | 300 | $36,367.53 | ($676.40) | $ 151.53 | ($524.86) | $35,842.66 | 301 | $35,842.66 | ($676.40) | $ 149.34 | ($527.05) | $35,315.61 | 302 | $35,315.61 | ($676.40) | $ 147.15 | ($529.25) | $34,786.36 | 303 | $34,786.36 | ($676.40) | $ 144.94 | ($531.45) | $34,254.91 | 304 | $34,254.91 | ($676.40) | $ 142.73 | ($533.67) | $33,721.25 | 305 | $33,721.25 | ($676.40) | $ 140.51 | ($535.89) | $33,185.36 | 306 | $33,185.36 | ($676.40) | $ 138.27 | ($538.12) | $32,647.23 | 307 | $32,647.23 | ($676.40) | $ 136.03 | ($540.37) | $32,106.87 | 308 | $32,106.87 | ($676.40) | $ 133.78 | ($542.62) | $31,564.25 | 309 | $31,564.25 | ($676.40) | $ 131.52 | ($544.88) | $31,019.37 | 310 | $31,019.37 | ($676.40) | $ 129.25 | ($547.15) | $30,472.23 | 311 | $30,472.23 | ($676.40) | $ 126.97 | ($549.43) | $29,922.80 | 312 | $29,922.80 | ($676.40) | $ 124.68 | ($551.72) | $29,371.08 | 313 | $29,371.08 | ($676.40) | $ 122.38 | ($554.02) | $28,817.07 | 314 | $28,817.07 | ($676.40) | $ 120.07 | ($556.32) | $28,260.74 | 315 | $28,260.74 | ($676.40) | $ 117.75 | ($558.64) | $27,702.10 | 316 | $27,702.10 | ($676.40) | $ 115.43 | ($560.97) | $27,141.13 | 317 | $27,141.13 | ($676.40) | $ 113.09 | ($563.31) | $26,577.82 | 318 | $26,577.82 | ($676.40) | $ 110.74 | ($565.65) | $26,012.17 | 319 | $26,012.17 | ($676.40) | $ 108.38 | ($568.01) | $25,444.16 |

320 | $25,444.16 | ($676.40) | $ 106.02 | ($570.38) | $24,873.78 | 321 | $24,873.78 | ($676.40) | $ 103.64 | ($572.75) | $24,301.02 | 322 | $24,301.02 | ($676.40) | $ 101.25 | ($575.14) | $23,725.88 | 323 | $23,725.88 | ($676.40) | $ 98.86 | ($577.54) | $23,148.35 | 324 | $23,148.35 | ($676.40) | $ 96.45 | ($579.94) | $22,568.40 | 325 | $22,568.40 | ($676.40) | $ 94.04 | ($582.36) | $21,986.04 | 326 | $21,986.04 | ($676.40) | $ 91.61 | ($584.79) | $21,401.25 | 327 | $21,401.25 | ($676.40) | $ 89.17 | ($587.22) | $20,814.03 | 328 | $20,814.03 | ($676.40) | $ 86.73 | ($589.67) | $20,224.36 | 329 | $20,224.36 | ($676.40) | $ 84.27 | ($592.13) | $19,632.23 | 330 | $19,632.23 | ($676.40) | $ 81.80 | ($594.59) | $19,037.64 | 331 | $19,037.64 | ($676.40) | $ 79.32 | ($597.07) | $18,440.57 | 332 | $18,440.57 | ($676.40) | $ 76.84 | ($599.56) | $17,841.01 | 333 | $17,841.01 | ($676.40) | $ 74.34 | ($602.06) | $17,238.95 | 334 | $17,238.95 | ($676.40) | $ 71.83 | ($604.57) | $16,634.38 | 335 | $16,634.38 | ($676.40) | $ 69.31 | ($607.09) | $16,027.30 | 336 | $16,027.30 | ($676.40) | $ 66.78 | ($609.61) | $15,417.68 | 337 | $15,417.68 | ($676.40) | $ 64.24 | ($612.15) | $14,805.53 | 338 | $14,805.53 | ($676.40) | $ 61.69 | ($614.71) | $14,190.82 | 339 | $14,190.82 | ($676.40) | $ 59.13 | ($617.27) | $13,573.56 | 340 | $13,573.56 | ($676.40) | $ 56.56 | ($619.84) | $12,953.72 | 341 | $12,953.72 | ($676.40) | $ 53.97 | ($622.42) | $12,331.30 | 342 | $12,331.30 | ($676.40) | $ 51.38 | ($625.01) | $11,706.28 | 343 | $11,706.28 | ($676.40) | $ 48.78 | ($627.62) | $11,078.66 | 344 | $11,078.66 | ($676.40) | $ 46.16 | ($630.23) | $10,448.43 | 345 | $10,448.43 | ($676.40) | $ 43.54 | ($632.86) | $9,815.57 | 346 | $9,815.57 | ($676.40) | $ 40.90 | ($635.50) | $9,180.07 | 347 | $9,180.07 | ($676.40) | $ 38.25 | ($638.14) | $8,541.93 | 348 | $8,541.93 | ($676.40) | $ 35.59 | ($640.80) | $7,901.12 | 349 | $7,901.12 | ($676.40) | $ 32.92 | ($643.47) | $7,257.65 | 350 | $7,257.65 | ($676.40) | $ 30.24 | ($646.16) | $6,611.49 | 351 | $6,611.49 | ($676.40) | $ 27.55 | ($648.85) | $5,962.65 | 352 | $5,962.65 | ($676.40) | $ 24.84 | ($651.55) | $5,311.10 | 353 | $5,311.10 | ($676.40) | $ 22.13 | ($654.27) | $4,656.83 | 354 | $4,656.83 | ($676.40) | $ 19.40 | ($656.99) | $3,999.84 | 355 | $3,999.84 | ($676.40) | $ 16.67 | ($659.73) | $3,340.11 | 356 | $3,340.11 | ($676.40) | $ 13.92 | ($662.48) | $2,677.63 | 357 | $2,677.63 | ($676.40) | $ 11.16 | ($665.24) | $2,012.39 | 358 | $2,012.39 | ($676.40) | $ 8.38 | ($668.01) | $1,344.38 | 359 | $1,344.38 | ($676.40) | $ 5.60 | ($670.79) | $673.59 | 360 | $673.59 | ($676.40) | $ 2.81 | ($673.59) | $0.00 |

6. If the Hall’s want to have as much of an after-tax income when they retire as they currently have, and assuming they live until they are 80 years old, how much money should they set aside each month so as to have enough money accumulated in their retirement nest egg? Assume that annual inflation rate is 4% per year for the whole term, the investment return is 8% per year before and after retirement, and that their tax rate is 28% throughout their life.

The Hall's Current Combined Income | 75,000 | Tax rate | 28% | Current After-tax income | 54,000 | Current Age | 30 | Retirement Age | 65 | Expected age at death | 80 | Number of Years until retirement | 35 | Number of Years in Retirement Phase | 15 | Annual Inflation Rate | 4% | Equivalent Annual Income Desired at age 65 | | (54000* 1.0435 = $ 213088.81) | $213,088.81 | Annual Investment Yield | 8% |

Ages | Year (n) | Annual Income | Present Value | 65 | 0 | 213,088.81 | | 66 | 1 | 221,612.36 | 205,196.63 | 67 | 2 | 230,476.85 | 197,596.75 | 68 | 3 | 239,695.93 | 190,278.35 | 69 | 4 | 249,283.76 | 183,231.01 | 70 | 5 | 259,255.11 | 176,444.67 | 71 | 6 | 269,625.32 | 169,909.69 | 72 | 7 | 280,410.33 | 163,616.73 | 73 | 8 | 291,626.74 | 157,556.86 | 74 | 9 | 303,291.81 | 151,721.42 | 75 | 10 | 315,423.49 | 146,102.11 | 76 | 11 | 328,040.43 | 140,690.92 | 77 | 12 | 341,162.04 | 135,480.14 | 78 | 13 | 354,808.53 | 130,462.36 | 79 | 14 | 369,000.87 | 125,630.42 | 80 | 15 | 383,760.90 | 120,977.44 | Present Value at age 65 (Retirement Nest Egg that must be accumulated) | | $ 2,394,895.49 |

Monthly deposit needed to reach retirement goal $1,044.04

Solution:

Future Value (required) = 2,394,895.49

$1,044.04

7. If the Hall’s continue paying the minimum 3% on their credit card debt each month, how long will it take them to pay it off and how much total interest will they have paid? If you were Dan, what would you advise them to do?

Credit Card Balance: 10,000 Interest Rate: 15.99% 3% Minimum Payment: 300 Number of months required to pay off debt: 44 months
Solution:

Total Interest Paid: 3310.1153

Dan's Advice
1. Endure paying least possible on: Car $221.58 College Loans $527.80
They are using it and it is in their idea and required to persist.

2. Live inexpensive for the next few months and recompense full existing on credit card debt and be able to clear the debt within 6 months.

3. Then start putting money away towards the house down payment, child's education, and retirement Down payment | $1,326.92 | Child's education | $319.28 | Retirement plan | $1,044.04 |

4. In 24 months, their university loans will be paid, the security near the down payment will have completed, and they can labour towards paying off their mortgage.

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