FINANCE

PROJECT QUARTER TWO

The project can be downloaded from your teachers website:

www.tinyurl.com/precalmagruder

www.tinyurl.com/precalrichards

Or you can get it from this link: www.tinyurl.com/financeproject2016


Project Description: In this project, you will decide on a job and research your starting salary. You will
then calculate your net monthly pay, your monthly savings, and your general expenditures (including
college loans, utilities, insurance, etc...) With the money left over, you will buy a car and a house without
exceeding your remaining budget. You will then calculate your monthly mortgage and automobile loan
payments as well as calculate how much you are paying in interest.

Grading: This project is due at the beginning of class on Thursday, November 17th for a summative
grade worth 20 pts. The Project is due at the END OF CLASS this day, not at the end of the day. If you are
absent for any reason, the project is still due on the due date. For each school day the project is late, 2
points will be deducted from your grade.


It is always best to turn in your project earlywell before the due date. If you turn it in early, on or
before Wednesday, November 16, you will receive 2 extra credit points.

The project is due by November 17 even if you are absent for any reason. You may not email the
project to your teacher. You must print it yourself. You have plenty of time to complete this project
and take care of any computer or printer issues prior to the due date. If necessary, it can be printed in the
school library.

You will be turning in this packet with pictures included and all work shown.

The grading rubric is attached.




Section I: Researching your job

Decide on a job and research starting salaries. You can use the internet or ask someone who is currently
working in that professional job. Find at least 3 starting salaries (not average salaries) for your chosen
job. You must document your resources with either the internet address or the name of the person. The
maximum yearly starting salary is $100,000.


Your Chosen Job: ___________________________________________________


STARTING YEARLY Salary Resource


Salary Comparison 1

Salary Comparison 2


Salary Comparison 3





Find the yearly average of the three starting salaries (remember you are capped at a maximum of

$100,000): $___________________



Compute your MONTHLY gross pay. $____________________
(Definition of gross pay: The amount of wages earned
by an employee before the appropriate taxes are taken out.)


Compute your monthly net pay by subtracting out 25%
of your gross pay for taxes. A: $____________________
(Definition of net pay: The remaining amount of an employee's
gross pay after deductions, such as taxes and retirement
contributions, are made.)


This amount is what you have for your remaining
monthly expenses.

Lets figure out how you will spend this money.

Section II: College Loans

Suppose you had to take out college loans over the course of your college career. The amount you
borrowed is based on your first quarter averages. You are required to start making monthly payments at
a 3.76% (as of October, 2016, studentaid.ed.gov) interest rate with equal monthly payments due over a
period of ten years. Hint: Use the PV Formula and solve for R!


1st Quarter Average Amount borrowed
Your formula setup: 96 100 $30,000
90 - 95 $35,000
84 89 $40,000
77 83 $45,000
71 76 $50,000
60 70 $60,000

B: Monthly College Loan Payment: $____________________________

How much will you have paid back to the lender of your loan?
Show your exact calculations. An example of this was done in class in the notes. Monthly Payment x 12 x 10

Section III: Calculating Total Monthly Deductions

*** Budgeting percentages found at http://budgeting.thenest.com/guidelines-budget-family-income-percentages-3183.html

Monthly NET PAY

A: $
College
Loan:
College Loan Already calculated B: $
Monthly Payment on previous page

Expenses:


Personal/ Calculate 20% of
Groceries/ your monthly net C: $
Entertainment pay. Write this
amount in the
right column.
Cell Phone D: $60 monthly
All insurance per
month (home E: $370 monthly
($140, auto $80,
health $150)
Calculate 8% of
Utilities your monthly net F: $
pay
Total Expenses G: $
(add C, D, E, and
F)

Savings:

Investments/ Calculate 10% of

College Savings your monthly net H: $
for your kid/ pay
Retirement

All Total Deductions:
Expenses/Savings
Add B + G + H J: $
Deductions /College Loan
TOTAL Take your monthly
net pay and
This is the amount
you have left to

A J = K
K: $
subtract your spend on a house
deductions. and car payment.

Section IV: Purchasing a car

Research car dealership websites to find a car you would be interested in purchasing.
You must purchase a brand new car from a dealership. Once you find it, insert a picture (screenshot) of the car
and include the year, make, model, and price of the car in your screenshot.

The dealership that you are purchasing the car from is _________________________________________.

Keep in mind how much you have left of your monthly net pay!

Year: _________________ Make:______________________________ Model:________________________







Insert pic here of the car you foundmake sure your pic includes the car, the year, make, model, and price.










Car price (rounded to the nearest hundred dollars): _$_______________________

***The price must be the MSRP price of the car that is listed on the dealers website. If you find a
dealership that offers a rebate, cash off MSRP, etc., you may use the sale price!


You will now compute the monthly car payment and the interest you will repay to the banking institution.
In the real world, your interest rate granted by your lender is determined by your FICO score.

(www.ehow.com)
What does FICO stand for?
Your credit score is a number that builds up in the background as you conduct your financial affairs. Creditors use this score to evaluate
you for everything from credit cards to cell phone accounts. You should understand as much about your personal credit data as possible,
including details like what the word FICO stands for in relation to credit scores.

FICO Trademark

The acronym FICO stands for Fair Isaac Corporation, an organization that computes and publishes credit scores for viewing by
consumers and creditors. FICO is a trademarked brand name that represents the credit scores it generates for consumers and creditors.
The Fair Isaac Corporation is one of the top analytics and decision-management product providers in the world. This is why many people
use the terms "credit score" and "FICO score" interchangeably.

FICO Ranges

FICO scores range from a low of 300 to a high of 850, which is the best possible score. Creditors commonly deem a FICO score of 650 to
699 as moderate and 700 or better as a good-to-excellent score. About a quarter of consumers who have an open credit file have scores
of less than 600 and the median FICO score for consumers is 732, as of 2010.

For our project, your FICO score will be determined by your 1st quarter average.


1st Quarter Average FICO Score APR (annual www.myfico.com; rates recorded October 20, 2016 based on a 36
percentage rate) month new auto loan in TX
96 100 720 850 3.347%

90 - 95 690719 4.524%

84 89 660 689 6.5% The interest rate corresponding to my FICO score is__________

77 83 620 659 9.638%
71 76 590 619 13.656%

60 70 500 589 14.465%


In the space below, fill in your computations for finding R, your monthly payment. You will be taking out a 36 month loan
which would be 3 years.

1 (1+ i) nt rate
PV = R with i=
i # compounds PV (car price): ________________

Your interest rate:_____________

Your formula setup:

Time of loan is 36 months: t = 3

L: Monthly Car payment: $___________________________

**The monthly car payment cannot be any advertised monthly payment made by a car dealership.
You must calculate the monthly payment using the Present Value formula.

a) Compute the amount you will have repaid to the lender once you have paid off the car. $__________________
Show your exact calculations. R x 12 x 36







b) How much interest have you ended up paying out to the lender? $_____________________
Show your exact calculations.. Amount from a) CAR PRICE

Section V: Purchasing a house

Use the web and find a house to purchase. You may not rent a house or an apartment.
Take a screenshot of the picture of the house along with the list price below. The
screenshot must include the address of the house as well as the selling price of the house.

Keep in mind how much you have left of your monthly net pay! You cannot exceed your
monthly budget!

Websites that you can use:
Ebby.com
Realtor.com
Zillow.com

Do not use foreclosures, short sales, or any other types. A 4 bedroom, 2500
sq ft house should not cost 30,000. If you are asking yourself if the house price
is too good to be true, then it probably is!


Total House Price: $ ___________________________














Insert pic here of the house you foundmake sure it includes the house address and the selling price.































Use your 1st quarter average to get your FICO score range and your corresponding home mortgage APR.

***These interest rates are DIFFERENT for a home loan they are not the same as the car loan rates.

For our project, your FICO score will be determined by your 1st quarter average.
www.myfico.com; rates recorded October 20, 2016


1st Quarter FICO Score 30-year APR
Average
96 100 760 850 3.195% The interest rate corresponding to my FICO score is


90 - 95 700 759 3.415%
84 89 680 699 3.591% __________
77 83 660 679 3.803%
71 76 640 659 4.229%
60 70 620 - 639 4.771%


In the space below, fill in your computations for finding R, your monthly payment.

You will be taking out a 30 year mortgage.

1 (1+ i) nt rate
PV = R with i=
i # compounds PV (home price): ________________

Your house interest rate:_______________

Your formula setup:

t: time of loan is t = 30 years

M: Monthly Mortgage payment: $______________________________

a) Compute the amount you will have repaid to the lender once you have paid off the house. $________________
Show your exact calculations. Look back to your Auto Payment for a hint on how to find a) and b)!









b) How much interest have you ended up paying out to the lender? $___________________
Show your exact calculations.

Section VI: Savings/Investments A look at your future

You must start thinking about retirement now! You must start planning for your childrens college funds now!

You are planning to invest/save 10% of your monthly net pay in an index fund.

10% of your monthly net pay is $_____________________________ (Look at your Savings in Section III above. You have
already calculated this numberlabeled H)


In the space below, fill in your computations for finding FV, the future value of your investment after monthly
contributions for 30 years, using an interest rate of 5%.


(1 + i)nt 1 rate
FV = R with i=
i # compounds R (monthly investment): _________

interest rate: 5%

Your formula setup:

t: 30 years

a) Give your investment return computed above. $______________________




b) Compute the total amount you paid towards the investment. $__________________
Show your exact calculations. An example of this was done in class in the notes.








c) How much interest will you have earned at the end of the investment? $_____________________
Show your exact calculations. An example of this was done in class in the notes.








Section VIII: Conclusion

Located in: Amount

Monthly Net Pay Section I

A: $
Labeled A

Total Monthly deductions Section III
including college loan, J: $
expenses, and Labeled J
savings/investments
Monthly car payment Section IV
L: $
Labeled L

Monthly mortgage payment Section V

M: $
Labeled M
All deductions J + L + M N: $


TOTAL monthly surplus or Subtract all of
deficit your deductions $
from your
monthly net pay.
A - N

If your monthly car and house payments exceed the amount of money you had remaining after
expenses and savings were deducted, then ONE POINT will be DEDUCTED from your overall project
grade.



Please look back into your project and fill in this information:


Price of Car and Interest Rate Used:______________________________________ Amount paid in interest is:__________


Price of House and Interest Rate Used:___________________________________ Amount paid in interest is:__________


Amount you Invested (10% of NET Pay):________________________________ Amount earned in interest is:________

 Grading Rubric (You dont have to print this page, but this is here for a
reference

Point Value Earned



Section I

Researching job 1
salary

Section II

College Loans 2

Section III
2
Expenses

Section IV
3
Purchasing a car

Section V
3
Purchasing a house

Section VI
3
Savings/Investment
Returns
Section VII
2
Conclusion
Surplus/Deficit

Extra Credit early +2

turn in

Total Grade _________ / 16 points