Personal Finance (Math)

Rebecca Wilson budgeted $1,200 for housing and utilities in July. She actually spent $1,160. What is her budget variance?

$1,200 budgeted less $1,160 spent = $40 surplus.

Fredrick received a $1,400 loan from the bank for a new appliance. The bank is using the simple interest formula for this two-year, 8% loan. What is his total interest?

$1,400 × .08 × 2 years = $224.

If you have a $150,000 30-year 5% mortgage, how much of your first monthly payment of $805.50 would go toward principal?

$150,000 × 5% × 1 month/12 months = $625.00. Total payment - Interest = Principal = $805.50 - $625.00 = $180.50.

Rachel Johnson has net monthly income of $2,500. She has a monthly auto loan payment of $275, a student loan payment of $150, and a credit card minimum payment of $50. What is her debt-payments-to-income ratio?

($275 + $150 + 50)/$2,500 = .19 = 19%.

$300 Security Deposit, $300 for five year lease, $300 * loan period in years * 2% interest, and end of lease charge of $500

($300 × 5 years × 12 months) + ($300 × 5 years × 2%) + ($500) = $18,530.

What is the down payment of a $20,000 car if you put 5% as down payment

5% of $20,000=.058*$20,000=$1,000

Nicholas earned 8% in his savings account. If he is in the 28% tax bracket, what is his after-tax savings rate of return?

After-tax rate = Return × (1 - Tax rate) = 8% × (1 - .28) = 8% × 0.72 = .0576 = 5.76%

Given the following information, calculate the net worth: Assets = $8,000 Cash inflows = $6,000 Cash outflows = $4,500 Liabilities = $4,000

Assets - Liabilities = Net worth; $8,000 - 4,000 = 4,000.

FInance Charge

Interest + Service Charge

Paul borrowed $200 to be repaid in one year. He paid 10% interest and a service charge of $3.00. What is his finance charge?

Interest = $200 × 10% = $20. Finance charge = Interest + Service charge = $20 + $3.00 = $23.00.

Debt-payment to income ratio

(debts) / income

Taxes

(lowest tax bracket % * cost) + (Taxable income bracket % * (income - lowest tax bracket))

At 10 percent interest, how long does it take to triple your money?

$3 = $1 x(1 + .10)t t = 11.53 years or PV=1 FV=-3 rate =10% payment =0 compute period ( set annually

If Melinda Miller estimates that her $5200 annual grocery bill will increase at an annual inflation rate of 4%, what should her annual grocery bill be in 3 years?

Fv =Pv* (1+i)^n=5200*(1.04)^3=5849.29

Present Value

FV * (1 / (1 + interest) ^ time)

Angela has just received an insurance settlement of $22,500. She wants to save this money until her daughter goes to college. If she can earn an average of 4.7 percent, compounded annually, how much will she have saved when her daughter enters college 6 years from now?

Future value = $22,500 x(1 + .047)6 = $29,638.94

What is the future value of $5,700 invested for 18 years at 9 percent compounded annually?

Future value = $5,700 x(1.09)6 = $26,887.59

Future Value

PV * 1 + interest rate) ^ time (years)

Which one of the following is the correct formula for the current value of $600 invested today at 5 percent interest for 6 years?

PV = $600 / (1 + .05)6

Which one of the following is the correct formula for computing the present value of $600 to be received in 6 years? The discount rate is 7 percent.

PV = $600/(1 + .07)6

Eight years from now, you will be inheriting $100,000. What is this inheritance worth to you today if you can earn 7.25 percent interest, compounded annually?

Present value = $100,000/(1 + .0725)8 = $57,124.39

interest

Principal (Total Cost) * Interest Rate * Time = Interest

Compound Interest

Principal = Value of investment / (1 + interest rate / number of times it's compounded) * time

After-tax-rate

Return * (1-Tax Rate)

How long will it take to double your savings if you earn 8 percent interest, compounded annually?

Rule of 72 = 72/8=9

Principal Cost

Total Payment - Interest = Principal

Total Lease Cost

Total monthly lease payment + Opportunity of security deposit + end of lease charges

Down Payment

percent of down payment of total cost of car