Due: Monday, Dec.

1st

Name: Brian S. Morales

FINANCE PROJECT

(Staple any work to the back of this before submitting.)

You just graduated with your 4-year degree and acquired a job in your field of study, making the average
gross income. You cashed in your savings bonds and some stocks that you owned as a down payment.
You have found a house that you can afford and create an amortization schedule to track how much is
being paid toward the principal and interest.
1. Research the average gross income for an entry-level job in your field of study. What is this
average gross income? Round to the nearest dollar.
$45,000
2. Determine your gross monthly income based on the answer to question 1.
$3,750
3. Suppose that you have no credit card debt and wish to purchase a house. As a rule of thumb, your
house payment to income ratio should not exceed 28 percent of your gross monthly income.
What is the maximum monthly payment (Excluding taxes and insurance) you can have so you
dont exceed 28% of your gross monthly income? Round to the nearest dollar. Answer based on
income above:
$1,050
4. Research and determine the current interest rate for 30-year fixed rate mortgage? Round to the
nearest hundredth of a percent.
In Riverside, CA (Where I plan to move) average rate is 4.125.
5. Using the maximum monthly payment determined in #3 and your interest rate from #4,
determine the maximum 30-year fixed rate mortgage you would qualify for. Round to the nearest
dollar.
$216,651
6. Now that you know the maximum mortgage amount you would qualify for, research and find a
house you would like that is under this maximum value. What is the list price for the house you
found?
$195,000
1

7. Because you are a first time home buyer, you qualify for a loan that only requires 5% down
instead of the 20% down for a traditional loan. How much money will you need to have for the
down payment? Round to the nearest dollar.
$9,750
8. To come up with the down payment you will be selling a savings bond paying an APR of 3.65%
compounding semi-annually that was originally purchased for $1000 the year you were born.
Please enter your age in years here.
28
How much will you cash this saving bond in for today? Hint: use your age as the time. Round to the
nearest dollar. $2,753
9. You will also sell 100 shares of a stock you own to help with your down payment. Search for a
stock of your choice on http://www.nasdaq.com/

To find a company, start typing in the company name under the Search bar. As you type
a list will appear under the search quotes bar. (i.e. Nike)

Click on the one you want, making sure to pick a stock with a 5-year history. A graph
should appear, and under the graph click on More Charting.

A new graph appears and under that graph are several time ranges. Click on the 5y to
get the 5 year history of the stock price.

Once the 5 year history is up, scroll over the top of the graph to get the left most point.

a. What is the stock symbol you chose? DIS

b. What was the value of your stock 5 years ago? (Hover over graph to see the value 5 years
ago) 32.29
c. If you bought 100 shares of this stock what did you pay? $3,229
d. How much can you sell your stock for today? 92.65
e. What is the percentage increase or decrease that happened when you sold your stock?
34.85%

10. What is the amount of your down payment if it is the total of your sales from your 100 shares of
stock and your savings bond? Round to the nearest dollar. $9,265
What will be the amount of your mortgage (after the down payment) if you pay list price for your
house? Round to the nearest dollar. $185,735
11. What is your mortgage payment using the mortgage amount calculated (from question #8) and
the current 30-year fixed interest rate (from question #3)? Round to the nearest cent. $900
12. Create an amortization table for the first 4 months of your mortgage.

DATE

PAYMENT

PRINCIPAL

INTEREST

TOTAL INTEREST

BALANCE

Dec. 2014

$900.16

$261.70

$638.46

$638.46

$185,473.30

Jan. 2015

$900.16

$262.60

$637.56

$1,276.03

$185,210.70

Feb. 2015

$900.16

$263.50

$636.66

$1,912.69

$184,947.20

Mar. 2015

$900.16

$264.41

$635.76

$2,548.45

$184,682.79

13. How much did you pay including principal and interest over the life of this loan? Round to the
nearest dollar. $ 324,059
14. What is the amount of interest you will pay over the term of this loan? Round to the nearest dollar.
$138,324
15. If you would like to put 7% of your yearly gross wages into a retirement plan (401K), how much
will be deposited each month? Round to the nearest cent. $262.50
16. If the 401k earns at a rate of 4.1% compounding monthly, how much could you withdraw at the
end of 40 years if you continue making the same monthly investment? Round to the nearest cent.
$307,059.24
17. Suppose you want to buy a car. Research the Kelley Blue Book price for a car of your choice:
$21,846
a. The sales person quotes you a payment for 4 years at a simple interest rate of 8.75%. What
will your payment be? Round to the nearest cent. $605.32
b. What will your payment be if you find a loan that is 4 years at an APR of 8.75%
compounded monthly? Round to the nearest cent. $541.05
c. How much will you save in interest over the course of 5 years by going with the loan that is
compounded monthly? 3084.96 (Over 4 years? Since loan is 4 years?)
18. After 3 years and 2 months you decide that you are moving and want to sell your house and car to
reinvest in the stock market. How much to you still owe on your house? How much do you still
owe on your car? Car = $5817, House = $175,130