Assignment 4

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School

British Columbia Institute of Technology *

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Course

MISC

Subject

Finance

Date

Feb 20, 2024

Type

pdf

Pages

4

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Reminder: In the following box, use the slash (/) in place of the division sign (÷). Now move on to the course’s very last Assessment of Learning! Assessment of Learning: Teacher-marked Personal finance You are near the end of this course. This is your final Assessment of Learning, which is used to evaluate your work based on established criteria and to assign a mark. Your teacher will provide you with feedback and a mark. This Assessment of Learning is worth 24% of your final mark for the course. Instructions There are four tasks in this Assessment of Learning. Task 1: Knowledge and Understanding questions 1. Determine the total amount of an investment of $1400 at 3.5% simple interest for 48 months. (4 marks) 2. Determine the total interest on a loan of $5000 if the interest rate is 6.24%, compounded monthly for 12 years. (4 marks) 3. Use the provided TVM solver to determine the interest rate on a loan of $5400 if interest is compounded monthly for 72 months and the final amount of the loan is $6965.35. List the values you used for present value, future value, number of years, and number of compounding periods per year. (3 marks)
(../ilo/20/tvm_monthly/index.html) Monthly Payment Solver Present Value Future Value Annual Interest (%) Number of Years Monthly Payment PMT Clear 4. Use the TVM solver to determine the monthly payment of a lease of $21 568 if the interest rate is 4.8% compounded monthly for 48 months. (3 marks) 5. Over a five-year period, the maintenance on a car included two oil changes per year ($48 each), new brakes ($452), new tires ($678), and a new set of spark plugs ($145). What is the average yearly maintenance fee on the car for the five-year period? (4 marks) (../ilo/20/tvm_monthly/index.html) Task 2: Thinking questions 6. Compare the cost of borrowing $4300 for six months (180 days) in the following two scenarios. How much will you save if you take out the bank loan as opposed to the cash advance? (12 marks) You take out the money as a cash advance at 19.99%, compounded daily. Your creditor charges a cash advance fee of $5. You take out a bank loan for the amount of the purchase at 6.75%, compounded monthly. 7. Determine the future value of a loan of $1850 at 3.6%, compounded monthly for three years and five years. How much money would you save if you were to pay back the loan in three years rather than five? (6 marks)
Task 3: Communication questions 8. Define the following terms: (10 marks) Monthly credit card statement Bond Mortgage Debit card Factory holdback 9. Explain why it’s better to start contributing to a retirement savings plan at a young age rather than at an older age. (4 marks) 10. Describe the concepts of risk, return, and access in relation to investments. Make sure to define each term. (8 marks) Task 4: Application questions 11. Use the TVM solver to answer this question. Suppose a new car with a purchase price of $25 150 can be bought or leased at an interest rate of 5.6%, compounded monthly for 48 months. The down payment on the purchase is 10% of the purchase price or $2515, while the down payment on the lease is $1040. The residual value for the lease is $14 750. There is a similar car on the lot that is two years old, selling for $17 500. The down payment required on the used car is $1750. Assume the residual value of the car at the end of the lease is $0.00. (15 marks) Determine the monthly payment for each of the three options if the terms of each loan are the same. Determine the total amount of interest paid on each loan. Determine the total amount paid for each of the three options, including principal, interest, and down payment. 12. Suri has decided to buy a car. The car has a MSRP of $24 500. She wishes to get several upgrades that will cost $2654. She has negotiated a $2800 discount from the MSRP. Freight costs $800. She must pay a fuel-efficiency tax of $500 and an air conditioner tax of $90. The dealer is charging her a non-taxable administration fee of $45. Licence fees (non- taxable) cost $80, and gas (also non-taxable) costs $50. Calculate the total amount, including taxes, that Suri must pay the dealership. ( Note: Tax is 13%.) (7 marks)
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(../ilo/20/tvm_monthly/index.html) Feedback and marking You will receive three kinds of feedback: Your teacher will highlight the phrases on the rubric that best describe your assignment to show you how you have done. Your teacher will also provide you with detailed comments about the strengths of your assignment, the areas of the assignment that need improvement, and the steps you should take to improve your work in the future. The final piece of feedback that you will receive will be your mark. Each of the four categories of knowledge and skills is weighted equally at 25 marks , making a total of 100 marks . The final mark on this Assessment of Learning is determined by your teacher based on their professional judgement of the requirements for the assignment. Rubric Please read the “ rubric (../assets/locker_docs/mbf3c_20_rubric.pdf) carefully.” This rubric will be used by your teacher to assess your work. You should refer to it too, so you’ll know exactly what your finished assignment should include. Submission This is your Unit 4 assessment for feedback and a grade. This assessment is worth 24% of your course grade. The teacher will assess your work using the rubric. Before submitting your assessment, review the rubric to ensure that you are meeting the success criteria to the best of your ability. When you are ready, return to the course home page and select 'Unit 2 Assignment' from the left side navigation bar. Go to the assignment, select your files, and submit. Next steps Congratulations on completing all your learning activities. An email will be sent to you outlining key information about your final test. The final test is worth 30% of your mark.