# PreCalc Finance Project

### Hour 5 Austin Adams

## Scenario 2

I had Scenario 2, which involved a lady with 35,000$ in student loans and 325$ car payment per month. She also made an annual income of 70,000$ per year. This annual income had 30% taken away from it, which ended up as 49,000$ per year. This 49,000$ changed to 4,083.33$ per month of spending money.

## Student Loans

This lady had around 35,000$ in student loans at the age of 25. From a quick google and asking around, your 10 years does not start when you are in school. There is also a 6 month period after you graduate from college. If she just so happened to get the loan the same month as it is right now, she would have 7.5 years left to pay back this loan. This is because I assumed she graduated in 4 years, so she was 22, and she also had the 6 month grace period. This account to the loan starting to tick when she was 22.5. As 2.5 years of the 10 have passed, she now has 7.5 years remaining. If her N = 90, her I = 6.8, her PV is 32,500$, then 35,000/((1-(1+.068/12)^(-12x7.5))/(.068/12)) = 497.53$ in student loans per month

## 30 Year Loan

If you the 497.53$ and the 325$ payment from the original gross income of 4,083$ then you have 3260.47$. Most people pay around 25% - 20% of their income to their house, so I picked 25% and that was equal to 815.12$ per month. 815.12$ per month would get you around a 160,873$ house, as Bank of Blue Valley is offering a 4.5% interest rate. The math for that is 815.12((1-(1+.045/12)^(-12x30)/(.045/12)) = 160,873$ loan.

The loan page is shown here - https://bankbv.connect.mortech-inc.com/connect/jsp/mortgageCenter/home.jsp

## The House!

This house is 4 bedroom and 3 bath house that is situated in Overland Park, KS. It costs 148,000$ dollars and 2,106 sqr feet. The link to the Zillow Ad is http://www.zillow.com/homedetails/5307-Goodman-Ln-Overland-Park-KS-66202/75536826_zpid/

## 30 Year Fixed Loan for the House!

The house is 148,000$. If she saved 25% of her income for the first 3 months, because she said she was not buying a house for 3 months, then she would have 2445.4$ of down payment. This would make the house payments go down a bit in price, because the loan would be 145,555.4$ now. With 360 payments, a 4.5% interest rate, and 145,554.4$ you have to pay back, that would be 737.5$ per month. The math being 145,555.4/((1-(1+.045/120)^(-12x30))/(.045/12)) = 737.5$.

## How Much Time and Money Would Be Saved By Adding 15% More Money?

The Original Payment for the house was 737.5$. Adding 15% more would increase the payment to 848.13$. If you did the math, it would end up being 22.3 years. The math is

(145,554.4x(.045/12)-1=(1+.045/12)^(-12xT). So, adding 15% would save you 7.7 years of time. The amount it would save you in money would be (30x12x737.5)-(22.3x12x848.14) = 38537.74.$.

## References

Interest Rate -

*Connect Plus*. (1, 01 14). Retrieved from https://bankbv.connect.mortech-inc.com/connect/jsp/mortgageCenter/home.jspHouse- Shopper, A. (12, 16 13). *5307-goodman-ln-overland-park-ks-66202*. Retrieved from http://www.zillow.com/homedetails/5307-Goodman-Ln-Overland-Park-KS-66202/75536826_zpid/