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North Shore Community College *

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Economics

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Feb 20, 2024

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ECO115 – Assignment 2 Name: Please complete all sections. Save the file as “Assignment2_FirstNameLastName.docx” and upload it back into Canvas using the assignment upload tool. 1. Go to https://www.bankrate.com/ and answer the following questions: a) Nationally, what bank will give you the highest rate on Money Market Accounts and savings accounts? b) Locally, what bank will give you the highest rate on Money Market Accounts and saving accounts? c) Locate “CDs and Investments” and find what bank, nationally, will pay you the highest rate on a one-year CD. d) Locate “CDs and Investments” and find what bank, locally, will pay you the highest rate on a one-year CD. 2. Go to www.bankrate.com/calculators/savings/simple-savings-calculator.aspx . Using this site, you can estimate how your savings will grow. a) By inputting an investment amount, the monthly deposit, the return, and the period of investment, you can calculate the value of your investment. Input $5,000 as the initial investment, $100 for the monthly deposit, and 6 percent for the annual interest rate compounded annually. How much will your investment be worth in 20 years? b) Now change the monthly deposit to $300. How much will your investment be worth in 20 years? c) Now change the period of investment to 30 years. How much more money will you be able to accumulate in 30 years as opposed to 20, using the original $100 monthly deposit amount? d) Now change the rate you can earn on your investment from 6 to 8 percent and evaluate the results. 3. Go to https://www.fdic.gov/resources/deposit-insurance/brochures/insured-deposits/ and answer the following questions: a) List at least three types of bank accounts that are insured by the FDIC. Are money market deposit accounts insured and, if so, to what limit? b) List three types of consumer investment products that are not insured. c) Are Treasury Securities insured by the FDIC? If Treasury Securities payments of interest and principal are deposited to your checking account are they FDIC insured? d) If you have a safety deposit box at an FDIC-insured bank, are the contents of the box insured by the FDIC? e) What is the maximum FDIC insurance coverage for a depositor at one insured bank? 4. Using the “New Car Calculator” on https://www.autoblog.com/cars-for-sale , enter the information identifying the make, model, and features of the first/next car you want to buy. What are the price ranges? Are there any local dealers selling the car?

5. Using the Web site www.bankrate.com/calculators/auto/auto-loan-calculator.aspx , compute the following information: a. Assume you purchase an automobile requiring a $30,000 loan at 7% for 48 months. What will be the monthly payment? What will be the total amount that you will pay over the 48 months? b. Assume the same data as in “a” except for a 60-month loan. What is your monthly payment? What is the total amount that you will pay over the 60 months? c. Using the same data as in “a,” compute the monthly payment assuming a 36- month loan. What is the total amount that you will pay over the 36 months? d. Which of the three loan periods used in “a,” “b,” and “c” will result in the lowest monthly payment? Which of the three will result in the lowest total amount paid over the term of the loan? 6. Go to http://www.smartmoney.com/calculator/autos/buy-or-lease-a-car- 1302833645461/ . Assume the price of the car is $20,000, you will make a $1,000 down payment and $350 monthly payment on lease. The term of the lease will be 36 months with rate of return on investment portfolio will be 6%. Value of the car at the end of lease will be $12,000. Based on the information provided, is it better to buy or lease? 7. Is there such a thing as the best time to buy a car ? Select one among the best times suggested by US News article https://cars.usnews.com/cars-trucks/6-best-times-to-buy-a- car and explain why. 8. Go to www.realtor.com . Enter the Zip code of your current home or the Zip code of where you plan to live after graduation, the price range of houses you are interested in, the number of bedrooms and baths, and hit “Search.” a. How many houses meet your criteria in the designated area? b. What is the range of prices, highest to lowest? c. Of the houses listed, identify the one that you are most interested in and explain why. 9. Go to http://www.bankrate.com/ a. What are the average national mortgage rates for 30-year fixed, 15-year fixed, and 5/1 ARM (adjustable-rate) mortgages? b. What financial institution is offering the lowest 30-year fixed mortgage rate with 0 points in your area for a $300,000 home purchase, 20% down payment, excellent credit score of 740 or above? 10. Buying a home is one of the largest purchases you’ll ever make, and doing it wrong will cripple you with stress and rob you of your other financial goals. List at least 10 among the common home buying mistakes from Dave Ramsey https://www.daveramsey.com/blog/5-home-buying-mistakes-young

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