Emily and Kumail 1. Background Information Emily, 28, and Kumail, 32, are engaged. They have a 4-year-old daughter. Emily and Kumail live in Teaneck NJ. Emily works for an advertising firm and is now making $82,000 a year. She expects her income to grow at 3% per year. Because it is a small firm, she does not have a pension plan. Kumail works in insurance, got his master's degree right after college, and is making $95,000 a year. He expects his income to grow at 2% per year. He works for a mid-size firm which offers a 401k to which he does not contribute. For any contributions he makes to his retirement plan and up to 6% of his income, the firm provides a one to one match. They have a total of $20,000 in their checking account (earning 0.1% per year) at Citibank and $30,000 in a savings account earning 0.2% per year. Emily carries $6,000 on her credit card, which charges an APR of 22%. Kumail has a credit card that charges an APR of 15% and he carries a balance of $4,000. Emily pays $100 per month on her card (the minimum required). Kumail pays $75 per month (also the minimum required.) Both Emily and Kumail have student loans. Emily has $20,000 in student loans charging an APR of 7% but Kumail, who got his master's from a private university, has $70,000 in student loans also charging an APR of 7%. 2) They would like to be student debt free in 5 years. Right now, they are paying their loans on a schedule which will have them debt-free in 10 years. What are the monthly payments on each loan? How much should they pay each month (assume the payments are made at the end of the month) to be student debt free in 5 years? 1 3) They are planning a wedding a year from now and have found a venue that offers a package deal at $35,000. The vendor offers them two payment options: (1) $10,000 down now, and then 12 monthly payments of $2,083. Alternatively, if they pay now, he will give them a 5% discount and charge only $33,250. Which option is cheaper? Do you think this offer is a good deal for Emily and Kumail? Emily and Kumail 1. Background Information Emily, 28, and Kumail, 32, are engaged. They have a 4-year-old daughter. Emily and Kumail live in Teaneck NJ. Emily works for an advertising firm and is now making $82,000 a year. She expects her income to grow at 3% per year. Because it is a small firm, she does not have a pension plan. Kumail works in insurance, got his master's degree right after college, and is making $95,000 a year. He expects his income to grow at 2% per year. He works for a mid-size firm which offers a 401k to which he does not contribute. For any contributions he makes to his retirement plan and up to 6% of his income, the firm provides a one to one match. They have a total of $20,000 in their checking account (earning 0.1% per year) at Citibank and $30,000 in a savings account earning 0.2% per year. Emily carries $6,000 on her credit card, which charges an APR of 22%. Kumail has a credit card that charges an APR of 15% and he carries a balance of $4,000. Emily pays $100 per month on her card (the minimum required). Kumail pays $75 per month (also the minimum required.) Both Emily and Kumail have student loans. Emily has $20,000 in student loans charging an APR of 7% but Kumail, who got his master's from a private university, has $70,000 in student loans also charging an APR of 7%. 2) They would like to be student debt free in 5 years. Right now, they are paying their loans on a schedule which will have them debt-free in 10 years. What are the monthly payments on each loan? How much should they pay each month (assume the payments are made at the end of the month) to be student debt free in 5 years? 1 3) They are planning a wedding a year from now and have found a venue that offers a package deal at $35,000. The vendor offers them two payment options: (1) $10,000 down now, and then 12 monthly payments of $2,083. Alternatively, if they pay now, he will give them a 5% discount and charge only $33,250. Which option is cheaper? Do you think this offer is a good deal for Emily and Kumail