Assignment Instructions: Download this document into Microsoft Word. Type your responses into the document and then upload the completed Microsoft Word document into Brightspace as one document. All assignments must be uploaded to Brightspace as a Microsoft Word document in one document. Assignments submitted in multiple files will receive a reduced grade or a grade of zero for the assignment. If you do not have access to Microsoft Word at home, print this document, complete the lab, and then use a campus computer lab computer to download the document and input your answers. All assignments must be uploaded to Brightspace as a Microsoft Word document in one document. Note: Show your work below each item, then put your final answers on the car calculations worksheet. The car calculations worksheet will be graded. 1. Choose a car (new or used) that you would like to purchase. Be sure to think about the type of car that you would realistically consider purchasing in the next couple of years (not your ultimate dream car). Once you have selected a car, verify that you can find maintenance information for your car on the Edmunds site (see number 9 below). If your car is not listed on the Edmunds site, please pick a similar car which is listed on the Edmunds site and use it for the rest of your calculations. List the car information, including the make, model, year, and list price in item one of the table. 2. Determine the amount of your down payment. For this project, make a 10% down payment and fill in the amount in item 2 of the table. In the real world, individuals can choose a different amount, and in fact some loans do not require a down payment. 3. Calculate the 3%tax (in N.C., we pay a 3% highway use tax in lieu of state sales tax). The tax is based on the list price. Source: Link to government highway use tax website. 4. Calculate the total amount to be financed. To find the total amount financed, take the list price minus the down payment plus the highway use tax. 5. Determine the interest rate for the car. Link to State Employee's Credit Union Website to research rates. Or, if you prefer, you can look up the rates on another legitimate website (cite your source). Decide on the term of a loan (number of years) that would be reasonable for you. List your rates, term, and source in the table. 6. Calculate your monthly payment for the loan and the yearly amount. Use this link to find the monthly payment. Note: This is the same calculations that is done with the monthly payment formulas from section 6.3. To find the yearly amount, take the monthly payment times 12. 7. Insurance rates are calculated on many factors such as: Age, Gender, Driving Record, Make/Model/Year of car, number of years driving etc.... Insurance rates will very per individual, however for this project, use the following average rates provided by my insurance agent: $2000/ year for full coverage on a new car, $1500/ year for full coverage on a used car. 8. Include the Department of Motor Vehicles Fee of $28 per year. 143 Signature Assignment Page 2 of 7 9. Calculate the maintenance cost per year by going to Edmunds True Cost to Own Your Car Website. Divide the 5Yr Total maintenance amount by 5 to get the average annual cost. Include your work in the middle column of the table and your one year maintenance cost in the right column. 10. Calculate fuel costs based on your car's average MPG (look it up!) and the average cost of a gallon of gas (\$3.36/gallon). You will need to estimate how many miles you drive per year. If you have no idea, you can you use 12,000 miles, which is the national average. 11. (\& 12) Calculate the county and city/municipal taxes. Tax rate schedules for all counties and municipalities can be found on the Internet (search for property tax rates). However, for this project, we will assume that everyone lives in Mecklenburg County and the city of Charlotte. Use the following rates: Mecklenburg has a tax of $0.8157 per $100 of the car's value and Charlotte has a tax of $0.437 per $100 of the car's value. For example, if your car has a value of $12,000, then the Mecklenburg county tax is ($0.8157)(12,000/100)=$97.88. 13. Calculate the Yearly Total (rows 6 through 12: the sum of yearly payments, insurance, DMV fee, maintenance, fuel, and taxes,). 14. Calculate the Grand Total(over entire length of loan): (Yearly Total times \# years of loan, plus down payment) Car Calculations Worksheet \begin{tabular}{|c|c|c|} \hline Directions & Descriptions and work space & \begin{tabular}{l} Fill this column with \\ your numbers. \end{tabular} \\ \hline#1 & \begin{tabular}{l} Record your Car's Make, Model and Year: \\ Make: \\ Model: \\ Year: \end{tabular} & List price of Car: \\ \hline#2 & Down payment: (10\%) & \\ \hline#3 & N.C. Highway Use Fee: ( 3% of list price) & \\ \hline#4 & Total amount to be financed: & \\ \hline & \begin{tabular}{l} Interest rate: __ and length of loan: \\ Source: \end{tabular} & Leave Blank \\ \hline#6 & Monthly Payment: & Yearly amount: \\ \hline#7 & Insurance costs (yearly): & \\ \hline#8 & \begin{tabular}{|l|l|} Department of Motor Vehicles fee (yearly): \end{tabular} & \\ \hline#9 & Total maintenance costs (yearly): & \\ \hline#10 & Fuel costs (yearly): & \\ \hline \# 11 & County taxes (yearly): & \\ \hline#12 & \begin{tabular}{|l|l|} City taxes (yearly): \\ \end{tabular} & \\ \hline#13 & \begin{tabular}{l} Yearly Total: \\ (the sum of yearly payments, insurance, DMV fee, \\ maintenance, fuel, and taxes) \end{tabular} & \\ \hline#14 & \begin{tabular}{l} Grand Total (over entire length of loan): \\ (Yearly Total *\# years of loan, plus down payment) \end{tabular} & \\ \hline \end{tabular} 15. If you have a job making $12.00 an hour, how many hours do you need to work per month just to pay your car expenses? How many hours do you need to work per week to pay your car expenses (assuming there are 4 weeks per month)? Make sure to answer both questions. (Hint: To calculate your car expenses, divide your Yearly Total by 12) Show your work. 16. How many hours do you need to work per month and per week if you make $15.00 an hour? Show your work. 17. Find the total installment price (sum of all the monthly payments and the down payment) and the finance charge (difference between the total installment price and the list price) for the loan of your car. Discuss what these numbers mean in relation to the list price and the loan. What does the total installment price represent? Is it greater or less than the list price? What does the finance charge represent? Is it better for a smaller or larger finance charge? Your response should be at least 6 sentences. Total installment Price: Finance Charge: 18. Complete the chart for the yearly cost of the car. In the space below write the Yearly Total and the cost of the car over the life of the loan (Grand Total). Based on your calculations do these figures make sense? Discuss whether these numbers are higher or lower than you expected and whether you personally would be able to afford this vehicle. Make sure you consider and discuss other life expenses. All verbal responses must be in complete sentences. Your response should be at least 6 sentences. Yearly Total: Grand Total: 19. Review your answers from number 15 and 16. Based upon the information from your car calculations, would an individual be able to afford this car if they earned $12 per hour or $15 per hour? Give details to justify your reasoning and discuss your options. Make sure you consider and discuss other life expenses. All verbal responses must be in complete sentences. Your response should be at least 6 sentences. Managing a Budget 20. Your good friend Amari needs some financial advice. He is thinking about buying a car and a house. Help Amari calculate his expenses and give him some friendly advice on his planned purchases. Here is Amari's story. Amari just graduated from CPCC in nursing and received his LPN license. He is starting his new job and will be making 65,000 a year. He will have to pay 19% of his income to pay for taxes and social security (SS) and 5% of his income to a forced employer retirement plan. How much of his income will he have left to spend? Fill in the table below: 21. Help Amari evaluate his budget. His current rent payment is $1,500 a month and his utilities total $150 each month. Amari spends $80 on a bundle for his house phone, cell phone, internet and cable bill every month. He has always believed that it is important to live a healthy lifestyle so he spends $450 a month on groceries and $89.00 a month for a gym membership. His health insurance for the month totals $100.00. Amari does not have much time to go out but he makes sure that he treats himself to dinner and a movie at least twice a month that costs $50.00 each time. He always puts away $150 each month into his personal savings account for retirement so he will not use this money for paying bills. Amari also puts away $20.00 each week for a vacation fund (assume that there are 4 weeks in a month). Amari loves his lattes and spends $4.50 on coffee once a week. Amari wants to purchase a car but is not sure if it will fit his budget. Compute Amari's income and expenses and determine if he can afford buying a new car. Monthly Expenses: Enter the monthly expenses for each item, then add them together to find the Total 22. Fill in the summary table below to see if they are on budget. Subtract the expenses from the income to find the monthly net total. 23. Suppose Amari has some unexpected health care expenses that makes his monthly net total decrease by $2000. How does this expense affect his monthly net total compared to before (what you calculated in \#22). Use the new monthly net income to explain your reasoning. All verbal responses must be in complete sentences. Your response should be at least 6 sentences. 24. Amari would like to buy his dream house for $300,000. He finances the whole purchase price of $300,000. Calculate his monthly payment if he secures a home mortgage loan at 6% APR for 30 years. Use this link to calculate the payment. Note, this is the same calculation as we did in section 6.3. Financial advisors use a general rule that your monthly payment for your home mortgage should not be more than 1/3rd your monthly income. Find 1/3 of Amari's monthly income. Discuss whether Amari will be able to afford his dream house. Give details to justify your reasoning and discuss Amari's options. All verbal responses must be in complete sentences. Your response should be at least 6 sentences. Monthly Payment for Dream House: 1/3 Monthly Income: 25. Now that we have looked at Amari's income and expenses, let's take a look at your own. Follow this link to complete a Reality Check of your expenses and how much you would need to earn yearly to cover all expenses. Discuss whether this yearly income is feasible for you and what adjustments might need to be made. All verbal responses should be at least 6 sentences. 43|Total Monthly Cost: Minimum Household Income: 26. What have you learned from this project? All verbal responses must be in complete sentences. Your response should be at least 6 sentences