(1) You have just graduated from EOU and secured a job as stock broker working for a regional brokerage exchange.To celebrate your new position, you are going to buy the car/truck of your dreams.

You can purchase any car/truck you like, but you cannot spend more than $600/month on the payment. You can take out a 5-year loan.The current interest rate is 5.99%

Shop for the car/truck you want on the Internet. Based on these guidelines, how much will your down payment have to be to purchase the vehicle?

Can you get there based on your first month's commissions?

What other options might exist?

(2) Your wealthy Aunt offers you a graduation gift.She will give you a $10,000 lump sum payment or 1,100/year for the next 10 years.This is essentially a risk-free gift from your standpoint.The risk-free rate currently sites at 2.5%.Which will you take?Why?Please use the financial principles from the chapter to make this decision.

Risk free rate = 2.5%

(3) You have been in your position for a decade now.You have been extremely successful. You are considering a new vacation home in Palm Springs, CA - you have always wanted to take up golf and spend more time by the pool!You can also consider any other resort community on the west coast.

Where will you go?Why?What are the average price in that area for a 2BD/2BA home?

You have $20,000 to put down, 30 years to pay, and the current interest rate for someone with a good FICO score like yours (640+) is 4.2%.How much will the monthly payments be?

The economy (GDP) is on track to grow more than 3% this year.The Federal Reserve has already raised rates a couple of times this year to keep inflation in check.How might that affect you if you have a fixed rate loan and that trend continues?

What if "The Fed" not successful at curbing inflation?How could inflation affect your purchase?

Now imagine that the threat of tariffs on the Chinese, and general diplomatic uncertainly on a global basis, causes an economic collapse and a return to the performance we saw in ~2008.

What are some possible scenarios you can imagine?Would your purchase still look like a good deal?

There are lots of potential answers here.Just explore the effect a downturn might have on different economic variables and how it could affect a (vacation) homeowner.

You are still determined to find a place in the sun, aren't you?