PreCalc Finance Project

Hour 6

For my PreCalc Finance Project, I was assigned scenario 2. In this scenario, Harper is running her own retail store and is earning about $70,000 annually. But she also has payments to make like monthly car payments and student loan payments. On top of this, she wants to buy a house in Leawood!

Total Harper Can Afford

Given her net monthly income of $3349.55, Harper can afford a house that costs $632936.12. We get this by using the current interest rate for a 30-year fixed rate loan, which was 4.875% as of December 29, 2013.

Minimum Monthly Payment

Harper has located a house in Leawood, KS that is $565,000. With an interest rate at 4.875%, she would have to pay monthly payments of $2990.03.

Increased Principle

Just by simply increasing her minimum monthly payment by 15%, Harper would save a significant amount of time and money. Her new monthly payments would be $3438.53. I figured out how much time she would save by using properties of exponential and logarithmic functions. I calculated how much money she saved by subtracting the total amount paid for the house with monthly payments increased by 15% from the total amount paid using the minimum monthly payment.