# Finance Project

## Brent the Construction Foreman: Scenario 1

Brent wants to purchase his first home. His annual salary is \$60,000 but after you take out taxes he has \$42,000 per year. I then divided the salary by 12 to see how much he has per month. The total was \$3500. But since Brent has a car payment of \$450 per month I subtracted the \$450 from \$3500. So in the end Brent has \$3050 each month.

I asked my parents and they said that he needed about \$1,500 dollars for himself each month for clothing food, and other materials.

Since I didn't know how much Brent has in savings I decided to not have him pay a down payment on the home and borrow the total value of the house from the bank. I used the present value equation to find how much Brent has to pay each month for 30 years to buy this \$195,000 home.

I found the rate on Wells Fargo.com on December 15, 2013. The rate I used was 4.750%

The result of the equation is Brent would have to pay \$1017.21 per month.

If Brent decided he wanted to pay off his mortgage earlier and increased his monthly payment by 15% then he would pay \$1169.78 per month. I used the Present Value equation to solve for n-the amount of time it would take to pay it off. The result was 22.7 years. Increasing pay by 15% saves him 7.3 years.
I figured the amount of money he saved by increasing monthly payments in the equations below. The result was \$47,543.93 and 7.3 years.

The first equation is the amount of money he would be paying if he decided with the minimum payment approach.

The second equation is the amount of money he would be paying if he decided to increase the payment per month by 15%.