Finance Project Reflection

This MATH 1030 project covered the class’ financial module. The project was not easy but very

insightful. When working with finances, especially with loans and interest rates, every detail of the

scenarios matter and should be taken into account. This project made me explore the different formulas

available for financial calculation, such as monthly payments on loan at fixed interest rates and future

values. Although I have had to personally make important financial decisions before, I had never been

exposed to the formulas used to calculate details on financial loans. After this project, I believe every

single person needs to understand the impact of good calculation in regards to financial loans.

Going deeper into this project, the financial decisions revolving around housing are followed for

2 subjects, Betty and Randy. Randy rents throughout his life and Betty decides to invest in a home

around age 25. The project made us analyze the contrast between both housing decisions. Although the

cost to purchase a home is significantly higher during the first years compared to the renting alternative,

the decision pays off. The project concluded with an 80 year old Betty with results of approximately

$1,300,000 positive from investments compared to a Randy with $0 resulting from his housing decisions.

There were many items left out of these calculations, such as maintenance, home owners insurance,

taxes and miscellaneous fees related to owning a home, compared to renting where those items are the

responsibility of the landlord. Regardless of the extra fees owning a home, especially when starting early

does add up.

These financial formulas learned during the project can also be applied to other types of loans

such as car loans. The calculations are very similar with home loans obviously having a higher principal

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and usually a lower interest rate. Another very interesting item learned while applying the formulas in

this project is how much can be saved in interest fees on a high principal loan by slightly adjusting

monthly payments. There are tools one can use to visualize the impact of extra monthly payments

towards the loan and how much a slight interest decrease affects the overall interest payed, a slight

change can save you tens of thousands over a 30 year period! Amortization calculations are very useful

and, in my opinion after going through this module, everyone should consult with one before making a

final decision on loan terms offered by a financial institution.

In summary, this module is very important since it involves real life scenarios that can save you

tens of thousands by understanding the correct way to calculate loan pay offs and major financial

decisions.

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