MAT 110
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Feb 20, 2024
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MAT 110 Final Project Instructions: Complete all sections of this Personal Finance Project by showing your work, writing in complete sentences, and including links for your research either in a Works Cited or directly under the question number where you used the link. In this project, you will find a job, pay taxes, buy a car, and buy a house. and investigate retirement. (bankrate.com is a good resource for finance rates and calculators). Note: showing your work would look like writing down what you might put into a calculator. Example: 5 x 3 = 15. Part I: Finding a Job [20 pts] 1.
Pick a career that you are interested in and state why you are interested in it. I’ve always been fascinated by the field of graphic design. I love the idea of using my creativity and artistic skills to communicate messages visually. 2.
Find the median salary for this career both nationally and in North Carolina. According to the U.S. Bureau of Labor Statistics, the median salary nationally is $57,990. The annual median for North Carolina is $51,620.
https://www.bls.gov/oes/current/oes271024.htm
https://nccareers.org/occupation-profile/271024/1284
3.
Research what your major should be to achieve this career. Typical Entry-level education bachelor’s degree.
4.
List the top 3 universities in the country for this major. -Rhode Island School of Design
-Parsons school of design
-Pyatt institute
5.
List any 3 universities in North Carolina that offer this major. -North Carolina State University
-Appalachian State University
-East Carolina University Part II: Paying Taxes [20 pts] (If you don’t know what percentile wages are, check out this link: https://www.bls.gov/oes/oes_perc.htm) 1.
List the 10
th percentile salary for your desired occupation in NC from the BLS website. If you plan to live in another state after you graduate,
you are welcome to use this amount. Instructions: Use the link: https://www.bls.gov/oes/current/map_changer.htm
. Choose your “Major
occupational group” and “occupation” that best fits your desired career. For “Measure”, choose “Annual mean wage by state”. If you hover over the state and leave your mouse there, a box pops up with the state salary and percentiles. Hover over the state where you will live and list the 10th percentile salary for your desired occupation. If you happen to pick a career or group that does not have the data, choose another state or another occupation that is similar. This is your gross income. $31,750.00
2.
Subtract 5% of your gross income from your gross income to put into a retirement plan. This is your adjusted gross income. 0.05 x 31,750 = $1,587.50
Subtract $1,587.50 from $31,750 = 30,162.50
3.
Find 30% of your adjusted gross income this is what you will pay toward taxes and other things. Multiply $30,162.50 by 0.30
0.30 x $30,162.50 = $9,048.75
4.
Subtract your total taxes (found in #3) from your adjusted gross income to get your yearly take-home pay
. This is the money you will have left after you have contributed to retirement and paid taxes etc. $ 30,162.50 - $9,048.75 = $21,113.75
5.
Find your monthly take-home pay
: $21,113.75 / 12 = $1,759.48
Part III: Buying a Car [20 pts]
1. Pick a car that makes sense for your budget. Find a listing for the sale price of the car you want and include the link. 2. Fill out the following Table: https://www.carfax.com/vehicle/2HGFG12636H552658
https://www.bankrate.com/loans/auto-loans/auto-loan-calculator/
https://sales.geico.com/quote
Car make and model: 2006 Honda Civic LX
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List price of Car: $7,995
Down payment: (10%) $7,996 x .10 =
$799.50
Amount of car price to be financed (borrowed) (car price minus down payment): 7,995.50- 799.50=
$7,195.50
N.C. Highway Use Fee: (3% of list price) 7995 x .03= $239.85
Total amount to be financed (amount of car price financed plus NC Highway Use Fee): $7195.50 + $239.85=
$7435.35 = $7436
Bank and terms of loan (include link): Bank rate 36month loan
Monthly payment (use auto loan calculator): $216
Annual Insurance costs (include link): $1,872.36/6 months x 2 = $3,744.72
$3,744.72
Total maintenance costs (0-3yrs old: $250, 4 or older: $800): $800
Annual gas costs (based on weekly habits at $3/gal): Annual milage average: 12,000/30mpg = 400 x $3/gal = $1,200
$1,200
Annual Grand Total (The sum of monthly payments, insurance, maintenance, fuel): Sum on monthly payments ($216) x annual (12) = $2,592 + $3,744.72 + $800 + $1,200= $8,336.72
Monthly Grand Total: Annual grand ($8,336.72 ) divided by 12 = $694.73
Part IV: Buying a House [20 pts] 1.
Find a listing for a house you want to buy in an area you wish to live. List the price of the home. 1104 Stantonsburg Cir SE, Wilson, NC 27893
$70,000
2.
Select a bank and state the finance rate for a 30-year fixed mortgage. (List what bank and state).
Bank of America 30- yr. fixed mortgage
Interest rate 5.27% of the 30-year fixed rate
3.
Assuming you have 20% for the down payment, then what is your down payment and how much will you finance? 20% = 0.20
70,000x 0.20 = down payment: 14,000. 70,000 – 14,000 = finance = $56,000
4.
Go to bankrate.com and search amortization-calculator or use the link: https://www.bankrate.com/mortgages/amortization-calculator/
. Based on the amount you need to finance, 30 years, and the finance rate, create an amortization table (automatically calculates when you type in your values). What is your monthly mortgage payment? Also, determine the total amount of interest you will pay over 30 years from the amortization table. Monthly mortgage payment: $310 total of interest paid
: $55,574
Payoff date: Nov 2053
5.
Now, assume you will pay $100 extra each month toward your mortgage. How many years will you shave off of your 30-year loan? How much interest will you save? (Hint: Use the button on the page that says “optional, make extra payments” and type in $100 for “additional amount to monthly payment”). Payoff date: May 2041
2053- 2041 = Years shaved off: 12 years
Interest will save: 55, 574 – 29,703 = saved $25,871
Part V: Investments and Retirement [20 pts]
1. What is a stock, a bond, and a mutual fund? What are the pros and cons of investing in each? Stock
:
When an investor buys a stock, part ownership in the form of a share is bought. If the business or enterprise happens to do well, the investor benefits by seeing an increase in the value of the share.
Bond: Bonds are a type of investment designed to aid governments and corporations to raise money. It can be viewed as a type of loan. There is no stock ownership and dividends.
Mutual fund: mutual funds are pooled investment vehicles. In a mutual fund, money collected from various investors is taken together to buy a large variety of securities. A mutual fund gives an investor instant diversification.
Stocks
Bonds
Mutual funds
Pros
Low; you do your own research and analysis
Protection against inflation
Low risk
Portfolio diversification
Convivence
Diversification
Professional management
Cons
Volatility and risk
Tax liability
Takes time and knowledge to get right
Variable rate
Withdrawal penalty Interest is taxable
High fees
Market risks
Manager risk
Tax efficiency
2. What is an IRA, a 401k, and a pension? What are the pros and cons of each retirement plan? IRA: This account is a personal savings plan that gives you tax advantages for setting aside money for retirement.
Pros: all contributions that you make to your account are tax-deductible Cons: if you withdraw any money before you turn 59 ½ you are subject to a 10% penalty (on the amount withdrawn) and the remaining money gets taxed as regular income.
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401k: This plan is a type of tax-deferred compensation plan where an employee can elect to have the employer contribute a portion of his or her salary retirement plan.
Pros: the employees get to decide how much of their salary is contributed to the plan
Cons: it is difficult and expensive to access your 401(k) savings before age 59 ½ and they carry a 10% penalty for early withdrawal. Pension: a plan that promises a specified monthly benefit at retirement. Usually, an employee with get paid between 50% and 60% of their final salary every year after they retire.
Pros: Guaranteed money at retirement. No fear of making the wrong investment decisions.
Cons: Reduced opportunity to make big money for your retirement. Limited investment selection.
Resources: https://corporatefinanceinstitute.com/resources/career-map/sell-side/capital-markets/stocks-
bonds-and-mutual-funds/#:~:text=When%20an%20investor%20buys%20a,a%20large
%20variety%20of%20securities
. https://www.westernsouthern.com/investments/pros-and-cons-of-mutual-funds
https://smartasset.com/investing/pros-and-cons-of-stocks#:~:text=Investing%20in%20stocks
%20offers%20the,need%20for%20time%20and%20expertise
. https://www.britannica.com/money/investing-i-bonds
https://quizlet.com/42908205/retirement-accounts-flash-cards/