I have attached the solutions with explanations for all the worksheets, with the four worksheet being excluded as discussed. Be aware of the questions that are answered with "(Opinion-based)" as those require your input. If there are any further questions or other topics that I can assist you with, just let me know and I'll be glad to assist you at any time :).

Solutions for Week 4 of Recitation/Week 5 of classes
Question 1: Why did you choose to do the alternate assignment instead of attending recitation?
(It’s not required to attend, and you can get full points by completing this assignment, I’m just
curious.)
(Opinion based)

Question 2: True or False. When creating a budget, it only really matters that you include the
biggest expenses like rent, utilities, and gas. Explain your reasoning behind choosing your
answer.
False. When creating a budget, all the components and aspects matter, including the expenses
that take up only a small fraction of the budget. Despite being a small area of the budget, other
expenses such as clothing, food, and online streaming services can eventually add up in the
near future that can eventually sum up to the expense of the biggest expenses. Thus, when
creating a budget, all expenses that you make matter.

Question 3: Suppose you get a $5 footlong (assume 6% sales tax) from Subway for lunch once
a week for a month and you also pay $8/month for Netflix. Calculate your monthly Subway
expense and determine what percentage the Subway expense is of your monthly Netflix
expense. Be sure to show your work or explain your steps. (assume 1 month = 4 weeks)
One footlong =
Since, we buy 1 footlong once a week for one, we’ll use conversion factors to solve for the
amount of money we pay at Subway in a given month:

So, we pay $21.20 per month for Subway sandwiches.
For Netflix, one month of subscription is worth $8.
Thus, we can now find the percentage of the Subway expense if of the monthly Netflix expense.
The following formula is used:

We solve for x:

Thus, the Subway expense is 265% of the monthly Netflix expense.

Question 4: If every month for 2 years you accumulate about $80 in credit card debt with a card
company that has a 13% annual interest rate, when you go to pay off the card at the end of the
second year, how much will you owe? (Round to the nearest cent) Show or explain your work.
First, we find the amount of credit card debt that we would have in a year:

We have $960 in credit card debt in a year. Now, we can calculate the amount after the first
year, using the annual interest rate:

Next, we add the $960 annual debt to our amount and calculate the amount again using the
annual interest rate:

You will owe $2.310.62 at the end of the second year

Question 5: From Q4, how much of what you owe the end of the 2 years is interest? (express
as a dollar amount AND as a percentage). The percentage is not 13% the annual interest rate,
why?
Let’s calculate the interest from the two years:
Year 1:
Year 2:

Now, let’s add these values and divide them by the total debt after two years:

The amount of interest is $390.62.
The interest is 16.9% of what you owe after 2 years.
The percentage is not 13% the annual interest rate because the money is compound, where the
money does not grow in a linear pattern, but instead an exponential pattern. The formula for
compound interest is:
Where n is the number of years and i is the interest rate

Question 6: Suppose you have a car that gets terrible gas mileage and requires that you put
premium in it, costing you $300 per month on gas. You find a used car that gets better gas
mileage and only requires unleaded. You calculate that driving the same distance in this car will
only cost you $100 per month on gas. If the car is $5000, how many months before this more
fuel-efficient car will pay for itself? Be sure to show your equation that you set up for this.
Car 1:

Car 2:

Car 2 is also $5,000
To calculate the time in which the car will pay for itself, we divide the price of the car by the
amount of gas payment per month:

It will take 50 months before the more fuel-efficient car pays for itself.

Question 7: Your friend tells you that she doesn’t budget because she has a credit card and
whatever she doesn’t have enough to cover at the end of the month, she can just charge to the
card. Do you think your friend is making a wise decision? If not, what advice/warnings would
you give her?

The friend is clearly not making the wise decision because the friend still has to pay the
amount owed to the card, otherwise the card is charged monthly and annual interest, which will
exponentially increase the amount owed over time. Therefore, it would rather be wise to use
budgeting, since the friend would be able to manage her expenses to avoid paying an amount
that may be harder to pay in the near future.

Question 8: Before studying this section, how important did you consider monitoring your
finances and what did you consider was the most important task to be able to keep them in
check?
(Opinion based)

Question 9: Did anything shock you when working through the content of this section? If not,
where or how did you learn to be financially aware?
(Opinion based)


Solutions for Week 6 of Recitation/Week 7 of classes
Question 1: Why did you choose to do the alternate assignment instead of attending recitation?
(It’s not required to attend, and you can get full points by completing this assignment, I’m just
curious.)
(Opinion-based)

Question 2: Define each of these terms in your own words: Annual return, total return, stock,
bond, cash investments, mutual fund, liquidity, capital gain, dividend, and current yield. (***I
know it seems like a lot, but you’ll need to know each of these terms to do your homework, so
by completing this problem well, you’ll have a list of definitions that make sense you already on
hand that you can reference.***)
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Annual return is the yearly return, or amount, that one gets from an investment over a
certain period of time
Total return is the total amount that one gets from an investment over a period of time
Stock is an investment that represents a partial ownership of a company
Bond is a loan issued by the government that pays a person a fixed rate of return over a
certain period of time
Cash investments are investments in the short term that provides return in the form of
interest payments
Mutual fund is an investment where investors pool their money together to buy stocks,
bonds, and/or securities
Liquidity is the ease in which money or other assets can be acquired
Capital gain is an increase in the vale of assets
Dividend is the amount of money that shareholders are paid for holding onto a share of
a stock
Current Yield is an investment’s annual income divided by current price of the stock or
security

Question 3: Here are four formulas included in this section:
Annual interest payment / current price of bond
A-P / P x 100%
A = PMT x ((1 + APR/n)nY – 1) / (APR/n)
(A/P)^(1/Y) – 1 (answer given as decimal)
Identify what each one helps you calculate and what each of the variables represent. (“x”
indicates multiplication)

This formula helps to calculate for the percentage of total return:

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A is the final stock price
P is the initial stock price

This formula is used to calculate for savings balance:
● A is the total balance
● PMT is the regular payment amount
● APR is the annual percentage rate
● N is the periods the payment is paid per year
● Y is the number of years

This formula is used to calculate for the amount of annual return:
● A is the final stock price
● P is the initial stock price
● Y is the number of investment years

Question 4: Suppose you have an extremely generous family and receive a gift of $5000 after
your high school graduation. You decide to invest all of it right before you begin your 4-year
college degree, hoping you can use it to pay for the first year of graduate school. Once you
graduate college, you find you have $12,000 in the account. Calculate BOTH your total return
and annual return. (Show work)
Total return:

The total return is 140%
Annual return:

The annual return is 0.24.

Question 5: From Q4, interpret what each of those values tell you about how your money grew
in the account over the years.
The total return shows me that, along with interest and capital gains, I have gained 140% of the
$5,000 that was initially invested. The annual return shows me that the $5,000 that was invested
had increased an average of 24% in each year.

Question 6a: Find the savings plan balance if you deposit $500 every two months for 6 years
into an account with an APR of 2%. (Show your work)

The $500 is deposited 6 times a year (12 months / 2 months = 6), so n=6

The savings balance after six years is $19,090.78.

Question 6b: How much did you deposit over the 6 years? (Show work)
$500 is deposited every month:

$18,000 is deposited over the 6 years.

Question 6c: Determine BOTH your total return and your annual return. (Show work and round
annual return to 6 decimal places)
Total return:

The total return is 6.06%.
Annual return:

The annual return is 0.00985.

Question 6d: Using the formula from last section for compound interest and the annual interest
rate from Q6c, calculate again how much you’d have in the savings account. Is your answer the
same as what you calculated in Q6a? (Show work)
Compound interest:

Using compound interest, the total balance will be $20,290.89, which is greater than the
previous amount calculated using the savings balance formula.

Question 7: In reference to bonds, in your own words describe what the difference is between
face value and coupon value?
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Face value is the amount of the bond’s price when it was first created
Coupon value shows the total amount of yearly interest paid to the bondholder

Question 8: What are “points” in reference to bonds? If a bond has a face value of $1000 and is
quoted at 110 points, how much is the bond selling for? (show work)
“Points” represent the fraction or piece of the face value of the bond that is being traded.
110 points points means 110% of the face value:

The bond is selling for $1,100.


Solutions for Week 8 of Recitation/Week 9 of classes:
Question 1: Why did you choose to do the alternate assignment instead of attending recitation?
(It’s not required to attend, and you can get full points by completing this assignment, I’m just
curious.)
(Opinion based)

Question 2: Define installment loans in your own words and state the formula to determine the
payment amount for an installment loan.
Installment loans are loans that are repaid regularly or at fixed intervals of time. The formula for
installment loans is:

Where:
● A is the total loan amount
● P is the loan payment, either monthly or annual
● APR is the annual interest rate
● N is the number of periods of the loan
● Y is the number of years

Question 3a: Calculate how much you’d need to pay monthly to pay off a loan of $2,500 with
an APR of 6% in 10 years. (Show your set up, round to the nearest cent, but DO NOT round
until the end.)

To pay off the loan of $2,500, one would need to pay $27.76 per month in 10 years.

Question 3b: What is the total amount you paid over the 10 years? (Show your set up.)

The total amount paid over the 10 years would be equal to $3,331.20.

Question 3c: What percentage of that total...