math-finace

Name:

Math 200 Budget Project

Due: Tuesday 05/05/2015

INSTRUCTIONS:

For this project you will construct a budget based on the attached biography. You will work alone on this project (as you would the exam that it is replacing), although you may consult your book/notes for reminders of formulas. The final product will need to be presented NEATLY in order to receive full credit. This means doing your work on the attached sheets in a clean and orderly presentation and filling in the budget worksheet provided clearly. Wednesday 4/29 will be an in class work day where you may ask me questions about your project. The project will be worth 50 points broken down in the following way:

Answering questions correctly and completely: 45 points

Neatness of presentation: 5 points

Biography

Your name is John/Jane Doe. You are 30 years old. You are married and have two kids (6 year old twins) named Play Doe and Not Madeof Doe. You currently work a job that pays you $50,000 a year gross. After taxes, benefits, and other withholdings you take home $44,835.00 for the year, split evenly each month. You recently bought a house that is described below, and you are paying off your almost six year old car. Each month you are required to pay a house payment, a car payment, your utilities and of course buy food. You can find a full list of expenditures on your included budget worksheet.

Net Income:

Take your annual take home pay and divide by 12. Place this amount on the Net Income line of the budget worksheet for each month.

Your House:

At the beginning of this year, you and your spouse bought a house. The asking price was $175,000. You paid 20% down and financed the rest through a simple interest amortized loan for 30 years at 3.49% annual interest.

a) From this information, how much will your monthly house payment be? Enter this number in the House Payment row for each month on the budget worksheet.

b) Estimate the total interest you will pay on your house before it is yours.

Your Car:

This June you will make your final car payment on a car that is almost six years old and you will own your pride and joy free and clear! You’ve been paying $338.20 a month for your car. If you borrowed the entire amount for your car (in other words, not down payment) as a simple interest amortized loan at 5% annual interest for those 6 years:

a) How much was your car originally worth?

b) Fill out the rest of the provided amortization schedule.

Payment #	Interest Portion	Principal Portion	Payment	Balance
67	$8.33	$329.87	$338.20	$1,670.36
68
69
70
71
72

c) For January through May, put $338.20 in for your car payment. In June put in the final payment you calculated for the amortization schedule. After that, put in $0.

Your Car Insurance:

Each year you are required to pay $1,311.00 in car insurance. You have the option to pay this in 2, 3, or 4 payments. (Note: This is not a loan, so to figure your payment you just take $1,311.00 divided by number of payments).

If you opt to pay it in 2 payments, figure out how much you would pay each time and place the answer in the Car Insurance row for January and July on the budget worksheet.

If you opt to pay it in 3 payments, figure out how much you would pay each time and place the answer in the Car Insurance row for January, May, and September on the budget worksheet.

If you opt to pay it in 4 payments, figure out how much you would pay each time and place the answer in the Car Insurance row for January, April, July, and October on the budget worksheet.

Food:

You will need to budget about $150 a week for food for your family. Calculate how much this works out to per month and place that number on the Food line in the budget worksheet for each month. (Note: There are 52 weeks a year and 12 months in a year.)

Utilities:

Each month you will pay $200 in utilities. This includes water, garbage, gas, and electricity. Put this on the utilities line in the budget worksheet in each month.

Cell Phone:

Each month you have a $150 a month phone bill for you and your spouse’s cell phones. Put this on the cell phone line in the budget worksheet in each month.

Retirement:

Each month, you put 5% of your income towards a retirement fund. Place this number on the Retirement line in each month on the budget worksheet.

Your employer matches your contribution to your retirement fund each month. Assuming that you keep this job as a career for 35 years with no pay change, how much money will have been saved into this annuity when you retire if the account has a 2% annual interest rate?

Kid’s Savings:

You are also saving up for your young ones to go to college. To this end, you want to save a total of $60,000 for your kids before they reach 18 to give them a good start. The account you are putting the money into has a 1.5% annual interest rate. How much do you need to set aside each month for this to happen? Put this number in on the Kid’s Savings line in each month on your budget worksheet.

Entertainment:

Each month you budget $200 towards entertainment. This includes movie/ video game rentals, going out to a movie/play etc. Put this amount on the Entertainment line for each month in the budget worksheet.

Incidentals:

Each month you set aside 6% of your take home pay in order to cover those things that pop up from time to time but may be different each month. I.e. laundry soap, gas, having to pay a plumber, etc. Figure this amount a put it on the Incidentals line for each month in the budget worksheet.

Savings:

At the end of each month, any money you have left over from your take home pay goes into your personal savings account. To calculate this, add up all your expenditures and subtract from your take home pay. A positive result means that you successfully stayed within your budget. A negative result in a month indicates you had to dip into your savings to help pay the bills. For each month, put how much money you saved on the Savings line at the bottom of your budget worksheet.