JENNIFER BARRY CASE STUDY

Jennifer Barry, age $25$ and single, is not unlike many young adults today. Just a few years out of

college, she is in debt. She owes $$16,000$ on a student loan $($with an APR of $6\%).$ Jennifer owes a

combined amount of $$7,300$ on two credit cards, and she has a $$3,000$ outstanding auto loan on

her car $($a $2015$ Kia Forte$).$I kind of went overboard on credit in college," Jennifer states. "Now

I want to get this debt paid off as soon as possible so I can increase my savings." Her current assets

consist of $$5,000$ in a checking account, $$3,000$ in a savings account, $$1,500$ worth of household

furnishings, and $$10,000$ in other personal property. Jennifer$$s Kia Forte is currently valued at

$$4,000($it is $7$ years old but runs fairly well$).$

Jennifer isn't waiting to repay her debts, before she starts saving. Jennifer currently works as a

Senior Analyst for New York Financial Corporation. She participates in a $401($k$)$ plan at her job

and contributes $4\%$ of her yearly salary $($before taxes$)$ to the plan $($contributions are made each pay

period$).$ The balance in Jennifer$$s $401$K retirement account as of January $1,2022$ is $$2,800.$

Jennifer is unsure about whether she has selected the right investment options. She puts $35\%$ of

her contributions in a stock index fund, $50\%$ in aggressive growth stock, $10\%$ in bonds and $5\%$ in

a cash$/$money market fund. "I wasn't sure what to do$,"$ she admits, $"$so I made the same choices for

my portfolio as my co$-$worker." Jennifer's employer provides a $10\%$ match to Jennifer$$s yearly

contribution to her $401$K retirement account.

Jennifer is currently saving $$200$ a month into a savings account at Brooklyn Savings Bank. The

account is currently earning an annual interest rate of $1\%.$

Automatic saving appeals to Jennifer, who confesses a weakness for shopping. She'd like to save

more, both for retirement in her $401$K plan and for emergencies. "I don't have much to fall back

on if my car breaks down or I have some other emergency," she worries.

After repaying her debts and increasing her savings, Jennifer$$s long$-$term goal is to purchase a

home in $7$ years. She is willing to assume some investment risk to achieve a moderate rate of return

to achieve this goal. Jennifer currently shares an apartment with a roommate.

Jennifer$$s yearly income is $$75,000,$ and her take home pay $($after contributing to her company$$s

$401$K retirement plan and after taxes are withheld$)$ is $$57,000$ annually, or $$2,375$ per pay period

$($her employer pays its employees on a bi$-$monthly basis$).$

Jennifer$$s monthly discretionary and non$-$discretionary expenses are as follows: $$500$ per month

for rent, $$75$ per month for utilities, $$200$ per month on her car loan payment $($APR $=5\%),$ $$200$

per month towards her credit card debt $($APR $=18\%),$ $$6,000($per year$)$ for advanced computer

courses at Brooklyn College $(50\%$ paid for by her employer$),$ $$100$ per month for gas and

maintenance for her car, $$100$ per month for food, $$75$ per month for clothing, $$250$ per month

towards her student loan, $$150$ per month for auto insurance and $$50$ per month for entertainment.

Within the next year, Jennifer would like to increase her savings account balance to $$5,000$ and

pay off her credit cards. In $7$ years, Jennifer believes her take home salary will increase by $1\mathrm{.}5$x$,$

and at that time she would like to purchase a home. Based on her salary at that time, her strategy

for purchasing is as follows:

Purchase price: $$200,000$

Down payment: $20\%$

Mortgage rate: $6\%$

Term: $30$ years

Real estate taxes on homes in the area she is interested in are currently $$3,000$ per year and are

expected to double in $7$ years, at the time she purchases the home.

Jennifer requests her credit report from all three credit bureaus every year. Her current credit score

is $785,$ but she found an error on one of the reports.

Jennifer is thinking of trading in her $7-$year$-$old Kia Forte vehicle for a newer car. She recently

went $$window shopping$$ and saw a used $3-$year$-$old Honda Civic with a MSRP of $$8,000.$ After

speaking with the dealer, she was $$offered$$ a rate of $4\%$ for $48$ months with a limited warranty on

the Honda Civic for consideration.

Jennifer is a forward thinker, enjoys her job very much and plans to retire from the company in $40$

years. She anticipates that her living expenses at retirement will be approximately $$2,000$ a month.

Her current $401($k$)$ retirement account is averaging a return of $6\%$ annually.

Jennifer is a big fan and user of Meta $($f$/$k$/$a $$Facebook$)$ and is interested in purchasing Meta

stock. She downloaded the following information from Yahoo Finance but is not sure if she should

invest now or wait $($as she is unfamiliar with interpreting a stock$).$

Jennifer has come to you for guidance on her financial condition and development of a financial

strategy. $3.$What kind of investor is Jennifer? Explain her investment philosophy. Does her current investments match her philosophy? Why or why not? $(3)14.$Analyze the Meta stock information given.