Question

1) Lucy wants to buy a house. The house costs $825,000. She will make a 20% down payment. She will have a 30-year mortgage at an interest rate of 5%.

a) Make an amortization schedule for the first 6 payments (not years) of her loan. Make sure your amortization table has the following columns (in this order): beginning balance, payment, interest, principal reduction, and ending balance. (Make sure you round to the nearest cent, not dollar!)

b) Assuming she follows her amortization schedule, what will be the total interest she will pay for her home after 30 years? Show calculations.

2) Lucy wants to retire comfortably. She wants to have 10 million dollars by the time she retires in 30 years.

a. How much money does Lucy need in her account today in order to have 10 million dollars in 30 years? She can earn 6% interest, compounded annually.

b. If Lucy were to make year-end payments to her account for the next 30 years, what would her payment amount have to be in order to have the 10 million dollars in 30 years, @ 6% interest, compounded annually?

3) Mary makes $16,000 a month (gross). She is married and claims 5 exemptions. Her state income tax withholding is 5%. (Use the text’s limit for social security, for parts a-c.)

a. What is Mary’s net pay for January? (After ALL taxes and withholdings…don’t forget SS, Med., FIT…) Show each tax/withholding amount (list Gross, then list each tax subtracted out to get net pay).

b. What is Mary’s net pay for September? (Not cumulative, JUST September’s net pay.)

c. What are Mary’s total taxes paid/withheld for the year? (Specify amounts for each tax.)

d. What is the current year’s income limit (base) for social security and maximum social security tax payable (in dollar amount)?

4) Pick two companies and track their stocks for three trading days (not weekends or holidays). You can find their stock information on the internet or in a newspaper. Tell me: the company’s name, their symbol, what stock market they are trading on, their high and low for the past year, what their dividend per share was last year, their closing price each day and what their price earnings ratio was for those days (show the calculation).

5) Find the consolidated financial statements for Garmin Ltd and Subsidiaries for the year ended December 29, 2018 and compute the following ratios: current ratio, debt to assets ratio, and return on equity ratio. (Form 10-K, search online). Show your calculations to earn credit. What might these ratio’s show about this company?

6) Pick two “Personal Finance, A Kiplinger Approach” or My Money articles from the textbook. (They are at the end of each chapter.) For each article you pick, write a one to two paragraph summary of the article and another paragraph on your thoughts/opinion/insights and items learned from reading the article. Indicate page number and which chapter the article is from.

Answer 1

1.a

loan value = house cost -down payment = $825000- $825000*0.2 = $825000-$165000 = $660000

monthly rate = 0.05/12 = 0.0041667

Monthly payment (PMT) = =-PMT(rate,nper,pv,fv,type)

=-pmt(0.0041667,360,0,0)

= $3543.02

nper = 30year *12 = 360 month.

interest = beginning balance * 0.0041667

principle = monthly payment - interest

ending balance = beginning balance - principle

next month beg bal = last month ending bal.

1b

Total payment after 30year =monthly payment * total month = $3543.02 *360 = $1275480

loan value = $660000

Total interest payment after 30 year = Total payment - loan value = $1275480- $660000 = $615480

hence you will pay $615480 as interest in next 30 years.