Finance Project - Scenario 3

By: Rob Chirpich

Jenny's Monthly Net Income (Salary After Tax)

  1. .3 * $30000 = $9000 Annual Cost of Taxes
  2. $30000 - $9000 = $21000 Annual Net Income
  3. $21000 / 12 = $1750 Monthly Net Income

Jenny's Cost of Student Loan (Monthly Student Loan Payment)

  1. PV = R * ( 1 - ( 1 + i ) ^ -n / i )
  2. $20000 = R * ( 1 - ( 1 + ( .068 / 12 ) ) ^ - ( 12 * 10 ) / ( .068 / 12 ) )
  3. $20000 = R * 86.89592298
  4. R = $20000 / 86.89592298
  5. R = 230.1606604
  6. Monthly Student Loan Payment is $230.16

Jenny's Monthly Budget (Monthly Payments)


  • Monthly Cost of Food: $200
  • Monthly Cost of Transportation: $400 (her car payment)
  • Monthly Cost of Gas: $70 (@ $1.70 a gallon)
  • Monthly Cost of Car Insurance: $100
  • Monthly Cost of Utilities: $220 (includes bills for electric, natural gas, water, sewer, trash/recycling, and internet)
  • Monthly Cost of Cell Phone: $45 (Verizon Wireless Medium Plan - Unlimited Talk and Text with 3GB of 4G LTE Data)
  • Monthly Cost of Entertainment: $50 (two movie tickets, Netflix, and Internet)
  • Monthly Cost of Student Loan: $230.16

Jenny's Remaining Monthly Net Income After Budgeting

$1750 - $200 = $1550 (Food)

$1550 - $400 = $1150 (Transportation)

$1150 - $70 = $1080 (Gas)

$1080 - $100 = $980 (Car Insurance)

$980 - $220 = $760 (Utilities)

$760 - $45 = $715 (Cell Phone)

$715 - $50 = $665 (Entertainment)

$665 - $230.16 = $434.84 (Student Loan)

Leftover Income is $434.84

Jenny's Mortgage Information

Secondary House Link:


http://www.zillow.com/homes/for_sale/Olathe-KS/75635998_zpid/33230_rid/50000-125000_price/179-447_mp/any_days/globalrelevanceex_sort/38.984098


Jenny's Home Address:


116 N Saxony Dr, Olathe, KS 66061


Cost of the House (before interest):


$87500 with APR of 4.319% for 30 years found on February 7, 2016 from Bank of America through Zillow with an interest rate of 4.250% also from Bank of America through Zillow


Monthly Payment of the House:


  1. PV = R * ( 1 - ( 1 + i ) ^ -n / i )
  2. $87500 = R * ( 1 - ( 1 + ( .04319 / 12 ) ) ^ - ( 12 * 30 ) / ( .04319 / 12 ) )
  3. $87500 = R * 201.6178866
  4. R = $87500 / 201.6178866
  5. R = 433.9892728
  6. Monthly Mortgage Payment is $433.99

First Year Amortization Tables

Table Using 4.250% Interest Rate


Month Payment Interest Principal Balance

1 433.99 309.90 124.09 87500 - 124.09 = 87375.91

2 433.99 309.46 124.53 87375.91 - 124.53 = 87251.38

3 433.99 309.02 124.97 87251.38 - 124.97 = 87126.41

4 433.99 308.57 125.42 87126.41 - 125.42 = 87000.99

5 433.99 308.13 125.86 87000.99 - 125.86 = 86875.13

6 433.99 307.68 126.31 86875.13 - 126.31 = 86748.82

7 433.99 307.24 126.75 86748.82 - 126.75 = 86622.07

8 433.99 306.79 127.20 86622.07 - 127.20 = 86494.87

9 433.99 306.34 127.65 86494.87 - 127.65 = 86367.22

10 433.99 305.88 128.11 86367.22 - 128.11 = 86239.11

11 433.99 305.43 128.56 86239.11 - 128.56 = 86110.55

12 433.99 304.97 129.02 86110.55 - 129.02 = 85981.53


Table Using 4.319% APR


Month Payment Interest Principal Balance

1 433.99 314.93 119.06 87500 - 119.06 = 87380.94

2 433.99 314.50 119.49 87380.94 - 119.49 = 87261.45

3 433.99 314.07 119.92 87261.45 - 119.92 = 87141.53

4 433.99 313.64 120.35 87141.53 - 120.35 = 87021.18

5 433.99 313.20 120.79 87021.18 - 120.79 = 86900.39

6 433.99 312.77 121.22 86900.39 - 121.22 = 86779.17

7 433.99 312.33 121.66 86779.17 - 121.66 = 86657.51

8 433.99 311.89 122.10 86657.51 - 122.10 = 86535.41

9 433.99 311.46 122.53 86535.41 - 122.53 = 86412.88

10 433.99 311.01 122.98 86412.88 - 122.98 = 86289.90

11 433.99 310.57 123.42 86289.90 - 123.42 = 86166.48

12 433.99 310.13 123.86 86188.48 - 123.86 = 86042.62

Increased Principle House Payment

Original Total Mortgage Cost


433.99 * 360 = 156236.40

Mortgage Cost Before Increase is $156236.40


Increased Monthly Mortgage Payment


433.99 * ( 15 / 100 ) = 65.0985

433.99 + 65.0985 = 499.0885

Increased Monthly Mortgage Payment is $499.10


Increased Total Mortgage Cost

N = 277.4876729

I% = 4.319

PV = 87500

PMT = -499.1

FV = 0

P/Y = 12

C/Y = 12


499.10 * 277.4876729 = 138494.0975

Mortgage Cost After Increase is $138494.10


Money and Time Saved


156236.40 - 138494.10 = 17742.3

Money Saved is $17742.30


360 - 277.4876729 = 82.5123271 Months

82.5123271 / 12 = 6.876027258 Years

Time Saved is ~83 Months or ~7 Years

APA References

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[EXTRA] Jenny's Unused Money

Unused Monthly Spending Money


434.84 - 433.99 = 0.85

Jenny's Unused Monthly Spending Money is $0.85