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FINANCE PROJECT
The objective of this project is to utilize finance formulas and investigate several factors related
to financial decisions, such as budgeting, savings account, credit cards, and student loans. This
project will require performing calculations within a spreadsheet program (Excel), analyzing the
outcomes, and discussing the results of these calculations.
Answers to the questions must be compiled into a single word-processing document (Microsoft
word), including necessary explanatory text and supporting information from the calculations
performed within the spreadsheet. Explanation and discussions of the answers must be in
complete, grammatically correct sentences. The final document must be neat and organized with
answers to the individual problems clearly labeled. Three individual projects throughout the
semester will be submitted separately, and feedback will be provided on each individual project.
The final project will consist all three individual projects, including revisions from the
instructors’ feedback.
When submitting the projects, the spreadsheet document and word-processing document must be
submitted electronically via Bb.
If you plan to use APA format (click on “APA Format” in Blackboard to see how this works—
no need to include a cover page and abstract), you will get extra credit for including APA.
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FINANCE PROJECT PART I:
PERSONAL ANNUAL INCOME & MONTHLY PAYMENT
1. Choose a career (My major is communication studies) that you hope to have when you
graduate from college. Explain why you choose this career? Be sure to elaborate and write
at least 10 sentences on your reasoning.
1.1. Visit the http://www.bls.gov/ooh/ or http://www.bls.gov/oes/current/oes_stru.htm
website and determine your gross income by using the median salary for the career you
chose. Your median salary should come from the percentile wage estimates for the
chosen occupation. E.g. Industrial Engineering’s median salary is $78,860.
Table 1: Percentile wage estimates for Industrial Engineering
Percentile
10%
25%
50% (Median) 75%
Hourly Wage $24.60
$30.60
$37.92
$46.38
Annual Wage $51,180
$63,640
$78,860
$96,460
90%
$56.87
$118,300
Note. From “17-2112 Industrial Engineers”, by Bureau of Labor Statistics, 2013, Occupational
employment statistics. Retrieved from http://www.bls.gov/oes/current/oes172112.htm.
1.2. Use the calculator online (Gross to Net): http://www.adp.com/tools-andresources/calculators-and-tools/payroll-calculators/salary-paycheck-calculator.aspx
to
find the monthly take-home-payment. See below for an example of what you need to
complete before calculating the monthly-take-home payment. To calculate what
percentage of your gross income is used for taxes, use Microsoft Equation to show your
work. Be sure to explain what the percentage means.
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Figure 1: Calculating take-home payment
Select a state
Do not use a
comma or “$”
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Table 2: Take-home payment
Note. From “Take Home Pay” by Automatic Data Processing (ADP), 2013, Paycheck calculator.
Retrieved from http://www.adp.com/tools-and-resources/calculators-and-tools/payrollcalculators/salary-paycheck-calculator.aspx.
𝑹𝒆𝒍𝒂𝒕𝒊𝒗𝒆 𝑪𝒉𝒂𝒏𝒈𝒆 =
𝑵𝒆𝒘!𝑶𝒍𝒅
× 𝟏𝟎𝟎
𝑶𝒍𝒅
New (Monthly take-home payment) = $4,476.17
Old (Monthly gross payment) = $6,571.67
(𝟒, 𝟒𝟕𝟔. 𝟏𝟕 − 𝟔, 𝟓𝟕𝟏. 𝟔𝟕
−𝟑𝟐%
𝑹𝒆𝒍𝒂𝒕𝒊𝒗𝒆 𝑪𝒉𝒂𝒏𝒈𝒆
𝟔, 𝟓𝟕𝟏. 𝟔𝟕
× 𝟏𝟎𝟎 = −𝟑𝟏. 𝟖𝟖𝟔𝟗 =
=
Be sure to explain what -32% means.
1.3. With your calculated annual net income, create a budget utilizing the recommended
percentages from Table 3. You may adjust the “Planned Budget” to accommodate your
lifestyle, but be sure to justify your changes.
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Table 3. Monthly Budget Percentages
Recommended
Planned
Budget
Housing:
Mortgage & Home Insurance
25 - 35%
25%
Utilities
(Water & electricity)
5 - 10%
10%
Food
5 - 15%
15%
Transportation
(Car, car insurance, & gas/bus/ train)
10 - 15%
15%
Medical costs
(Insurance + supplies)
5 - 10%
5%
Clothing/ Supplies
(Toiletries, shoes, and/or clothes)
2 - 7%
3%
Personal costs/Recreation
(Electronic device, Internet, partygoing, gifts, etc.)
5 - 10%
7%
Debt Payments
(Student loan & credit card)
5 - 10%
10%
Investments/Savings
5 - 10%
5%
Charitable Giving
10 - 15%
5%
Category
Monthly Spending
$4476.17 × .25 = $𝟏𝟏𝟏𝟗. 𝟎𝟒
$4476.17 × .10 = $𝟒𝟒𝟕. 𝟔𝟐
$4476.17 × .15 = $𝟔𝟕𝟏. 𝟒𝟑
$4476.17 × .15 = $𝟔𝟕𝟏. 𝟒𝟑
$4476.17 × .05 = $𝟐𝟐𝟑. 𝟖𝟏
$4476.17 × .03 = $𝟏𝟑𝟒. 𝟐𝟗
$4476.17 × .07 = $𝟑𝟏𝟑. 𝟑𝟑
$4476.17 × .10 = $𝟒𝟒𝟕. 𝟔𝟐
$4476.17 × .05 = $𝟐𝟐𝟑. 𝟖𝟏
$4476.17 × .05 = $𝟐𝟐𝟑. 𝟖𝟏
Total
100%
$4,4476.17
Note:
Please set up a new table on your own (do not copy this table, due to SafeAssignment’s matching
score). Refer to e-Learning lab how to use Excel and/or set up a new table in MS Word.
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FINANCE PROJECT PART II:
SAVINGS
1. Find two annuities, such as advertisements that refer to compound interest rates with opening
a savings account, retirement planning, life income, college savings, long-term care, estate
planning, and so forth. More information can be found via
http://blog.annuitythinktank.com/annuity-basics/.
2. For each advertisement:
Document the advertisement that refers to two different annual percentage rates
(APR) with opening a savings account.
3. With the first advertisement…
3.1. Calculate how much you would earn in 5 years if you deposit $7,000 at one time and do
not make any further deposits.
3.2. Calculate how much you would earn in 5 years if you deposit your monthly savings
from your budget in the Finance Project Part I (#1.3—see the picture below, $223.81).
4. With the second advertisement…
4.1. Calculate how much you would earn in 5 years if you deposit $7,000 at one time and
do not make any further deposits.
4.2. Calculate how much you would earn in 5 years if you deposit your monthly savings
from your budget in the Finance Project Part I, #1.3.
5. Based on the calculations from #3 and #4 in Finance Project Part II, determine which bank
offers the better deal and explain why. Be sure to justify your answers. (Write at least 5
sentences)
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FINANCE PROJECT PART III:
CREDIT CARDS
1. Find two credit card advertisements via online or paper-based.
2. For each credit card:
Document the credit card advertisements with two different annual percentage
rates.
3. With the first credit card advertisement…
3.1 You opened a new credit card with one year of 0% interest. You built a credit card debt
of $9,000 from purchasing a new flat screen TV, a Mac laptop, and an all-inclusive trip to
Europe. Calculate your monthly payment with the intent of paying it off in one year to
avoid interest.
3.2 Assuming that you have college loans and you are using half of your debt payments to
pay for college loans and the other half for credit card debts. Does the monthly payment
that you calculated in Finance Project Part 3, #3.1 fit with your budget ($447.62/2 =
$223.81 for student loan and credit card) from Finance Project Part 1, #1.3? Explain.
3.3 Using half of what you budgeted for paying off debts from your budget in the Finance
Project Part I, #1.3, calculate your monthly payment if you intend to pay off your credit
card debt after two, three, four, five years, and 10 years. (Assume that you have had
the credit card for years and ignore any 0% APR for the first xx months). Explain if your
debt will be paid off or not after two, three, four or five years. If your debt is not paid off
after two, three, four, or five years, provide an estimate of when your debt will be paid
off. Show your work and explain.
4. With the other credit card advertisement,
4.1.You opened a new credit card with one year of 0% interest. You built a credit card debt
of $9,000 from purchasing a new flat screen TV, a Mac laptop, and an all-inclusive trip to
Europe. Calculate your monthly payment with the intent of paying it off in one year to
avoid interest.
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4.2.Assuming that you have college loans and you are using half of your debt payments to
pay for college loans and the other half for credit card debts. Does the monthly payment
that you calculated in Finance Project Part 3, #3.1 fit with your budget ($447.62/2 =
$223.81 for student loan and credit card) from Finance Project Part 1, #1.3? Explain.
4.3.Using half of what you budgeted for paying off debts from your budget in the Finance
Project Part I, #1.3, calculate your monthly payment if you intend to pay off your credit
card debt after two, three, four, five years, and 10 years. (Assume that you have had
the credit card for years and ignore any 0% APR for the first xx months). Explain if your
debt will be paid off or not after two, three, four or five years. If your debt is not paid off
after two, three, four, or five years, provide an estimate of when your debt will be paid
off. Show your work and explain.
5. Based on the calculations from #4 and #5 in Finance Project Part III, determine which credit
card offers the better deal and explain why. Be sure to justify your answers. (Write at least
5 sentences)
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FINANCE PROJECT PART IV:
LOANS
1. Visit the https://studentaid.ed.gov/types/loans/subsidized-unsubsidized website and answer
the following questions
1.1.As an undergraduate student, which loan would you qualify for: direct subsidized loan or
direct unsubsidized loan? Explain.
1.2.As a graduate student, which loan would you qualify for: direct subsidized loan or direct
unsubidized loan? Explain.
1.3. Find the interest rates for loans first disbursed from July 1, 2014 and before July 1, 2015
Table 4. Interest Rate for Student Loans
UNDERGRADUATE
STUDENTS
DIRECT SUBSIDIZED LOANS
DIRECT UNSUBSIDIZED LOANS
GRADUATE
STUDENTS
2. Calculate how much attending Gallaudet University for four years will cost. Assume that you
will be an undergraduate student from the United States using room/board, health insurance,
health service, and units for four years. (Use Gallaudet’s tuition and fee schedule for Fall
2014/Spring 2015).
3. Create a table (shown below) and answer the following questions:
3.1.Calculate your monthly payments, with the appropriate interest rate from Finance
Project Part IV #1.3, with 12 payment periods per year and loan terms (y = 5, 10, 15, 30
years). Assume that you will begin your loan payments after you graduate.
3.2.Which of the monthly payments from Finance Project Part IV #3.1 fit with your
budget? If you have two or more monthly payments that fit with your budget, which
one would you choose and why? Explain.
3.3.For each monthly payment you calculated from Finance Project Part IV #3.1, calculate
the total payment. Indicate how much interest was paid on the loan for each scenario (y
= 5, 10, 15, and 30 years).
3.4.Based on your answers from Finance Project Part IV #3.3, calculate the percentage of
interest paid and the percentage of principal paid for each scenario.
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Table 5. Student Loans Monthly Payment, Principal, and Interest
5 years
10 years
15 years
Monthly Payment
Yes/No
Total Payment
Principal
Interest
% of Principal
% of Interest
30 years
4. Explain what you learned from Finance Project Part IV, #3.1 – 3.4, and whether or not you
would make adjustments to your budget for debt payments.
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