Jenny's Jiving Joint
Pre-Calculus Finance Project
Jenny is a college drop-out who works as a bank teller. She has an annual income of $40,000, 30% of which goes to her taxes. I calculated that she then has $28,000 left after her taxes are deducted then divided by twelve to get her monthly payment which ended up being approximately $2,333. After discussing how much she would need for other expenses with my dad, we came to the conclusion that 60% of her monthly income should be kept to spend on food, clothes, and other necessities and desires. This left her with $1,400 for car, student, and house loans. She was still $20,000 in debt due to college and in order to pay it off in 10 years, she would need to make $230 monthly payments (see picture for work). She also owes $230 a month for car loans and when added to her student loans it totals to $460. I then subtracted that from the $1,400 to get $940. From there I took into account home insurance and property taxes which my dad told me was about 20% of the monthly payment so it calculated to $752. In order to find out how much money I needed to borrow from the bank, I needed to find the interest on the loan which my dad said is usually 4.5% (see picture for how I calculated bank loan). On average banks ask for 5% down payment before the loan (Dad) so after calculating about $148,415 total for the loan, I multiplied it by .05 to get a $7,420.78 down payment. In order to calculate the maximum I should pay on a home, I added them together. This ended up being approximately $155,836. I found a house that was $145,000. To figure out the down payment on this house I had to take 5% of the actual house which ended up being $7,250. She then would need to ask the bank for a $137,750 loan so she would only need to make $697.96 minimum monthly payments to pay off her debt in 30 years (see work).