Procedure: In our brief case study, we assume the Thomas and Jeffersn families have identical mortgages (30-year term, fixed-rate 6% APR and a loan amount of $175,000). The Thomas family will not pay extra but the Jeffersons will. Follow the steps below prior to your analysis 1. Using the Payment mini calculator of the Financial Toolboxes spreadsheet, calculate the mortgage payment (the same for both families). Required Monthly Payment S 2. Assume that the Thomas's will make only the required mortgage payment. The Jeffersons, however, would like to pay off their loan early. They decide to make the equivalent of an extra payment each year by adding an extra 1/12 of the payment to the required amount. Complete the following calculations to find what they plan to pay each month:- a. 1/12 of the required monthly payment b. By adding this 1/12 to the required payments, the Jeffersons plan to pay $ each month. 3. The Thomas's will take the full 30 years to pay off their loan, since they are making only the required payments. The Jefferson's extra payment amount, on the other hand, will allow them to pay off their loan more rapidly. Use the Years mini financial calculator of the Financial Toolbox spreadsheet to calculate the approximate number of years (nearest 10") it would take the Jeffersons to pay off their loan. Number of years to pay off loan = Analysis: For the Thomas Family: assume that they could afford to make the same extra payment as the Jeffersons, but instead they decide to put that money (#2a from Procedures above) into a savings plan called an nnuity. Use the Future Value mini financial calculator of the Financial Toolbox spreadsheet to calculate how much they will have in their savings plan at the end of 30 years at the various interest rates. Write your answers (to the nearest dollar) in the appropriate cells of the table below For the Jefferson Family: assume that they save nothing until their loan is paid off, but then after their debt is paid, they start putting their full monthly payment and 1 /12 (#2b. from Procedures above) into a savings plan. The time in months they invest is equal to 360 months minus the number of year, needed to pay off the loan (#3 from Procedures above) multiplied by 12, Use the Future Value mini financial calculator to calculate how much they will have in their savings plan at the various interest rates. Write your answers (to the nearest dollar) in the appropriate cells of the table below. Procedure: In our brief case study, we assume the Thomas and Jeffersn families have identical mortgages (30-year term, fixed-rate 6% APR and a loan amount of $175,000). The Thomas family will not pay extra but the Jeffersons will. Follow the steps below prior to your analysis 1. Using the Payment mini calculator of the Financial Toolboxes spreadsheet, calculate the mortgage payment (the same for both families). Required Monthly Payment S 2. Assume that the Thomas's will make only the required mortgage payment. The Jeffersons, however, would like to pay off their loan early. They decide to make the equivalent of an extra payment each year by adding an extra 1/12 of the payment to the required amount. Complete the following calculations to find what they plan to pay each month:- a. 1/12 of the required monthly payment b. By adding this 1/12 to the required payments, the Jeffersons plan to pay $ each month. 3. The Thomas's will take the full 30 years to pay off their loan, since they are making only the required payments. The Jefferson's extra payment amount, on the other hand, will allow them to pay off their loan more rapidly. Use the Years mini financial calculator of the Financial Toolbox spreadsheet to calculate the approximate number of years (nearest 10") it would take the Jeffersons to pay off their loan. Number of years to pay off loan = Analysis: For the Thomas Family: assume that they could afford to make the same extra payment as the Jeffersons, but instead they decide to put that money (#2a from Procedures above) into a savings plan called an nnuity. Use the Future Value mini financial calculator of the Financial Toolbox spreadsheet to calculate how much they will have in their savings plan at the end of 30 years at the various interest rates. Write your answers (to the nearest dollar) in the appropriate cells of the table below For the Jefferson Family: assume that they save nothing until their loan is paid off, but then after their debt is paid, they start putting their full monthly payment and 1 /12 (#2b. from Procedures above) into a savings plan. The time in months they invest is equal to 360 months minus the number of year, needed to pay off the loan (#3 from Procedures above) multiplied by 12, Use the Future Value mini financial calculator to calculate how much they will have in their savings plan at the various interest rates. Write your answers (to the nearest dollar) in the appropriate cells of the table below
