Pre-Calc Finance Project
Scenario 2: By Luke Embry Hour 3 (Colwell)
Harper earns $4,083.33 a month
Harper earns 70,000 dollars a year, and after the 30% tax cut she is left with $49,000 for her total annual salary.
Harper's Student Loan Payment is $402.78 Monthly
Because Harper went to college, she has a student loan of $35,000. The loan must be paid within 10 years, requiring 120 payments from her. So, if the interest rate is 6.8%, her payment would be $402.78 per month.
Car Payment
Harper also has a payment to make towards her Car for $325 a month.
Costs of Living
Harper also has money that needs to go towards food and other necessities. If she spends around $400 a month on food and $200 dollars a month on other groceries, her cost of living would come to about $600 a month.
Material Wealth
Obviously Harper will want to spend her money on home improvements and furniture, so she will spend an average of about $1000 dollars a month in this category.
Totaling up the Digits
$4,083.33
-$402.78
-$325
-$600
-$1,000 = up to $1,755.55 a month to spend on a house.
Bank of America requires at least a 4.732% interest rate on a 30 year loan. So, Harper would be capable of buying a house at $337,240.69 or less.
An Affordable House for Harper
The house picture here is priced right around $300,000, this is within the price range Harper would be looking for.
Location: 12913 Reeder Street, Overland Park, KS, United States
Housing Cost (Current)
PV= 300,000
I%= 4.372
N= 360
PMT= 1,497.32
$1,497.32 x 360pmts = $539,035 spent
Housing Cost (Monthly PMT Increases 15%)
PV= 300,000
I%=4.372
PMT= $1,721.92
N= 273.15
$1,721.92 x 273.15 = $470,341 spent
*10.24 years and $68,694 saved
Citations
(2014, January 1). Bank of America Corporation. Retrieved from https://www.bankofamerica.com/home-loans/mortgage/overview.go
(2014, January 2). Reece and Nichols. Retrieved from http://www.reeceandnichols.com/listing/listingsearch.aspx