Blog

The purpose of this assignment is for you to present your reasoning and solutions to the assigned financial literacy problems presented in class. Each problem will be graded as followed:Description of the problem and what information is given (10%)Explanation of approach to solve the problem (25%)Clear demonstration of problem solving and calculation (25%)Explanation of solution to the problem (20%)Correctness (20%)Due Date: Thursday, September 23rd at 11:59 PMSubmission: Microsoft Word document via BlackboardRequested problems:Paychecks & Progressive TaxesPaychecks & Progressive Taxes  Suppose you and your significant other are both employed fulltime. You make $164,900 per year and they make $90,000 per year in gross income and further assume that you are living in Ohio. Using the information below, how much do you and your partner make per month after taxes (both state and federal) if filed separately and if filed as married joint? You may or may not consider social security tax (6.2%) and Medicare (1.45%) in your calculation, but you must clearly state your decision. Use the tax brackets provided in the Paychecks & Progressive Tax lesson. Credit Basics & InterestAssume you open an investment account and initially deposit $200. Calculate the amount in the account after 3 years given the following:a. 5% simple interest, annuallyb. 5% simple interest, monthlyc. 5% compounding interest, annually d. 5% compounding interest, monthlyIn during the month of September (

billing period begins on the 1st and ends on the 30th) if you have a credit card with an APR rate of 22.99% and an average daily balance of $100. How much interest would you be charged? What if your APR rate was 20% but you average daily balance was $150? Renting/Leasing vs. BuyingSuppose you have saved up some money because are interested in either buying a house or renting a house in Columbus, Ohio. Using Zillow, you find two similar places:BUY: Cost of the house is $154,000RENT: $1,462 monthly paymentsDetermine the total cost of purchasing the house after 5 years (total interest paid + HOA fees + property tax + general upkeep) to the cost of renting for 5 years. To purchase the house, you’ll need to put down a down payment of 20% to secure a 5-year, 10% annual fixed rate mortgage loan. Because mortgage loans follow a “amortization schedule”, use the provided excel file to determine the total cost of interest. There are also other fees associated with owning a home: 1% property tax (annual), $180 homeowners’ association fee (monthly), $100 general maintenance (monthly). Assuming you decide to rent, you’ll still have your “down payment” that would have gone towards purchasing a house. In this scenario, assume you invest that full amount into a 5 year-annual fixed rate investment. Assuming a simple interest model, what “interest rate” would you need to make renting equally expensive as buying then selling the house? Do not consider any taxes or deductions.