# Brent's Finances

### By: Kristen Xu, Hour 5, Stein

## Scenario #1

24 year old Brent has no college loans, but *does* have an income of $50,000 and a $23,000 car with a 6.5% 5 year car loan.

## Salary per Month After Tax

Per month: 41,706.25/12= $3475.52

## Car Payment

23,000=R((1-(1+(.065/12))^-60)/(.065/12))

23,000=R(51.10867958)

R=$234.79

## Monthly Budget

Car Payment: $234.79

Food: $311.60

Utilities: $367.96

Cell Phone: $73

Gas(comes from the two websites above)/entertainment: $358.50

Other: $100

Total Monthly Expenses: $1737.47

## Budget for House

Mortgage Interest Rate: 5.25%

What can I afford?: PV=1738((1-(1+(.0525/12)^(-12*30)))/(.0525/12))

PV=(1738.09(181.0925925)

PV= $314,755.22

Brent should buy a house that costs $300,000 so he won't max out his budget.

## A 30 Year Fixed Rate Loan

300,000-60,000=R((1-(1+(.0375/12))^-12*30)/(.0375/12))

R= $1,111.48

## First Year Amortization Table

1 | 1,111.48 | 750 | 361.48 | 241,861.48

2 |1,111.48 |755.82 | 355.66 | 243,728.78

3 |1,111.48 |761.65 | 349.83 | 245,601.91

4 |1,111.48 |767.50 | 343.98 | 247,480.90

5 |1,111.48 |773.38 | 338.10 | 249,365.75

6 |1,111.48 |779.27 | 332.21 | 251,256.50

7 |1,111.48 |785.18 | 326.30 | 253,153.16

8 |1,111.48 |791.10 | 320.38 | 255,055.74

9 | 1,111.48 |797.05 | 314.43 | 256,964.27

10|1,111.48 |803.01 | 308.47 | 258,878.76

11| 1,111.48 |809.00 | 302.48 | 260,799.24

12| 1,111.48 |815.00 | 296.48 | 262,725.72

## Increasing the Minimum Monthly Payment by 15%

240,000=1278.19((1-(1+(.0375/12))^-12*t)/(.0375/12))

T=22.69

It would take around 22 years and 8 months with the increase in monthly payments, so it would save 7 years and 4 months.

To find how much money is paid with the original payment, you multiply it by 12 (the number of months in a year) and 30 (the total amount of years Brent will be paying). As a result, you get $400,132.80.

1111.48(12)(30)=$400,132.80

To find how much money is paid with the increased payment, you multiply it by 12 (the number of months in a year) and 22 (the amount in years Brent is paying). You must then add $1,278.19 (the payment) multiplied by 8 (the number of months not included in the amount of years.

(1278.19(12)(22))+(1278.19*8)=$347,667.68

To find how much is saved, you subtract the new value from the old:

400,132.80-347,667.68=$52,465.12

Brent would same 7 years and 4 months and $52,465.12 if he increased his minimum monthly payment by 15%.