Question

You may utilize the same person you interviewed in week 1 to continue your assignment.
When was the last time you purchased renter’s/homeowner's and/or automobile insurance? What would you do differently next time you purchase such insurance? Explain with specific details. Consult with your interviewee to find if there were any changes since your last purchase or policy review? If you did not purchase or have a policy review please consult with the instructor.

Ask the interviewee to help prepare an education plan for your baby who is going to attend college after 18 years. Use the tools and analysis covered in Chapter 6 such as estimating costs, computing your contributions, making appropriate investments, etc. Have him or her consider your child attending a community college for two years before attending a major university. What would be the advantages and disadvantages of this approach?

• The Corona Virus - how is it affecting the cost of medical attention?

• What have you seen either on a state or federal level affect the cost of this pandemic?

• What are your thoughts on this particular subject?

You want to buy a car. Describe how you would determine the price you can afford to pay, how much should be financed, and how you would select a lender. Provide a specific example and conduct a quantitative analysis. For this particular part of your assignment; you can consult with your interviewee or do it yourself.

Answer 1

Answers from the interviewee

When was the last time you purchased renter’s/homeowner's and/or automobile insurance? - In January 2020 - Automobile Insurance

What would you do differently next time you purchase such insurance? Explain with specific details. - i would look into how zero depreciation works. I have not yet considered that factor in my buying decision

Consult with your interviewee to find if there were any changes since your last purchase or policy review? If you did not purchase or have a policy review please consult with the instructor. - No changes that I am aware of

Ask the interviewee to help prepare an education plan for your baby who is going to attend college after 18 years. Use the tools and analysis covered in Chapter 6 such as estimating costs, computing your contributions, making appropriate investments, etc. Have him or her consider your child attending a community college for two years before attending a major university. What would be the advantages and disadvantages of this approach?

Saving for baby's education after 18 years requires us to calculate the cost of tuition, cost of living and other ancillary expenses while he attends community college and then attends a major university. Once we have calculated the figure, we create a plan which leaves enough cash flow as savings for investments that will support the baby's expenses in the future. Considering assumption for everyday expenses and other big events of life (like possible medical needs, buying house etc.), we calculate our yearly cash flows for the next 18 -20 years. Considering a particular componding rate, we can calculate the Future Value of these cash flows and that future value of these cash flows should be higher than the expense requirement for the baby in future. In case, they are not enough, some higher risk investments that can give higher compounding to the cash flows can be looked at. This way we will be able to create a sound plan for funding baby's future education.

• The Corona Virus - how is it affecting the cost of medical attention?

It is putting a great pressure on the medial system and most of the hospitals are operating above capacity. The cost of medical attention is extremely high for this virus

• What have you seen either on a state or federal level affect the cost of this pandemic? -Yes, with the recent bail-out packages announced by the government, the cost of the pandemic can be seen having effect on the state and the federal level. Also the cummulative level of economic value being lost everyday is a cost associated with this pandemic

• What are your thoughts on this particular subject?

I think the cost is too high but it is the need of the hour to control it in order to protect human lives

You want to buy a car. Describe how you would determine the price you can afford to pay, how much should be financed, and how you would select a lender. Provide a specific example and conduct a quantitative analysis

Car is a discretionary purchase and we can estimate the price we can afford to pay by looking at our disposable income. In case we have a disposale income (saving) which is much higher than the cost of the car and we dont have any other large purchases planned, we can buy it on downpayment. For the decision on how much to borrow, this depends on the monthly cash flows that a person is receiving and the part of those cash flows that will be saved/invested. The remaining can be used to pay off the debt. Considering a particular saving rate, one can determine the loan amount one can easily repay from our monthly cashflows. Interest rate is a key criteria in selecting a lender. However it is also important to go for a good institution and not lend from an unorganised dealer to create a good credit history that can help the individual in the long run.