2013 Jeep Grand Cherokee

Salary: 120,000

Yearly/Monthly Budget:

Taxes: \$30,000/ \$2500

Housing: \$42,000/ \$3500

Food: \$18,000/ \$1500

Savings: \$6,000/ \$500

Transportation Payment: \$12,000/ \$1000

Other: \$6,000/ \$500

Medical: \$3,600/ \$300

Miscellaneous: \$2,400/\$200

Below I used the Present Value formula to calculate what I could afford and find the best deal for my budget.

Car Payment

Yearly: \$12,000

Monthly: \$1,000

Using the total amount of what I can afford I calculated:

3 Year Loan- PV= \$33,998.68

4 Year Loan- PV= \$44,509.02

5 Year Loan- PV= \$54,633.11

The car I chose costs \$26,998 and I calculated what I could afford for my monthly payments.

3 Year Loan- \$823.51

4 Year Loan- \$629.02

5 Year Loan- \$512.50

Overall Payment

I chose the 3 year loan because it fits best with my budget, therefore I will pay \$29,646.36 over the course of the loan.

(823.51)(12.3)= \$29,646.36

The car I chose was a 2013 Jeep Grand Cherokee that costs \$26,998. I have a salary of 120,000, which is pretty big, I still decided to spend a decent amount on the car because I still have other expenses to take car of. I chose the 3 year plan with a monthly payment of \$823.51, because it fit best with my budget. I used CarMax to find my car and I was able to find the car I want and like with a great deal.

Extra Credit

3.75% Interest Rate- 22,533.04

0%- 24,515.00

If Mrs. O'Connell did not pay the interest, she would not be getting a good deal. By paying the 3.75% interest, she would be saving \$33.06 every monthly payment. Even though it would take more time paying it off, it is the better paying option. Overall Mrs. O'Connell will be paying \$22,533.04 for her car with interest.