PERSONAL FINANCE

UNIT OVERVIEW: When you complete your high school education, you will be faced with many new financial challenges as you enter the world of work or pursue further education. In this unit, you will investigate the various features of savings plans, loans, and mortgages and discover how each of these is an example of an annuity. You will solve problems involving annuities using technology. You will also plan for the future by exploring the costs involved in both renting and owning accommodation, and gathering the information related to income and expenses required to create a monthly budget.

1. Why do you find personal finance interesting? 2. Provide an interesting mathematical problem, and a complete solution to the problem about personal finance. Explain what makes the problem interesting to you.

EXAMPLE PROBLEM about personal finance:

After finishing college, Manpreet must repay her student loan of $12 000.00. Manpreet wants to make bi-weekly payments and have the loan paid off in three years. Interest is charged at 7.25% /a, compounded bi-weekly. How much are Manpreets payments?

For annuity problems involving the repayment of a loan, the amount of the loan is entered under present value, and the future value is zero (meaning the balance of the loan is $0.00 at the end of the annuity). The term bi-weekly means every two weeks, which amounts to 26 periods per year. Here is what your TVM Solver screen should look like:

Remember that N represents the total number of payments. In this example, Manpreet makes 26 payments per year for 3 years, for a total of 78 payments.

In this example, we solve for PMT. We can see that the amount of her bi-weekly payments is $171.40. Recall that the payment is displayed as a negative value since Manpreet is paying this amount.

I N=78 IX=7.25 PV=12000 PMT= 171.39649... FV=0 P/Y=26 C/Y=26 PMT END BEGIN I N=78 IX=7.25 PV=12000 PMT= 171.39649... FV=0 P/Y=26 C/Y=26 PMT END BEGIN