Mini Assignments for the Finance Project
This is not the finance project. These assignments are to help you with your research. This is to
avoid last-minute research. This assignment sheet will help you get the information you will need
to write your paper. Each task has a due date (You are encourage to submit the assignment
before that date). The assignments are to be typed. Your instructor expects to see paragraphs,
sentences, and charts. All information should include references and information on how you
calculated the figures. Most of this information can be found on the Internet. The Career Center in
Old Main can help with salaries. Complex equations can be hand written. If you can’t find the
information, talk to your instructor. All information you get needs to be printed and submitted with
the mini project and for your paper.
The first 2 assignments do not depend on anything taught in class. You can do them anytime
before the due date.
1. Due ________
Write a paragraph about your major and career goals. The job must be realistic and what you
are planning to do after you graduate. I know plans and ideas can change, but for this project,
pick a job that is presently obtainable for your major. Where are you planning to work after
you graduate? Include your starting salary (not the average salary) and your estimated salary
in 5 years. You must explain where and how you calculated these figures.
2. Due _________
Using your starting salary, estimate your annual income tax for federal and state (for where
you plan to live after graduation). (IRS.com and state government)
A chart and a paragraph or two should be included.
Budget and savings
Upon graduation, you will start working using your job you listed above. When you start
working, you will have monthly expenses. Make an estimated budget. Some items to include
are rent, utilities, loans (student, car, etc.), insurance (health, car, renters, etc.) credit cards,
food, supplies, entertainment, charities, clothes, gas for the car, etc. (The more realistic and
actual facts will help your grade)
Now find how much is left over from your monthly salary
Annual salary divided by 12 = monthly gross income
Annual taxes divided by 12 = monthly taxes
Monthly gross income – monthly taxes = monthly net income
Extra money at the end of a month = monthly gross income – monthly taxes – monthly budget expenses
If this value is less than $50, you need to revise your budget and cut some of your spending.
A chart and a few paragraphs explaining your budget.
Do not start until after we start the finance chapter
3. Due _____________
Finding a place to live. (This location should be in the area you plan to work)
The second part of this project is to BUY a place to live. This can be a house, condominium,
duplex, trailer, etc. (House will refer to any one of these.)
What is your annual salary in 5 years? Multiply this number by 2.1. Find a place no more than
this number. (If you can’t find a place then see your instructor)
Once you found a place, print out (make a few copies) the multi listing. Find the location and
information about this house, check on closing costs, annual property taxes, association dues,
and other information you can about this house. Get as much information about this house the
first time; if the house is sold before you have all the necessary information, you won’t be able
to retrieve the information.
Submit one copy of the house and picture. Write a paragraph or two about this house and why
you picked it.
Down payment and Loan
Calculate the down payment required for this house. (Standard down payment 20%)
Standard down payment = .20 (Price of the house)
Calculate the loan required.
Loan = (Price of the house) – (standard down payment)
Write a sentence or two along with the calculations
4. Due __________
Monthly house payment
Your research is to find a financial institution with its mortgage rates and closing cost. You will
need to find the property taxes and a quote for the annual homeowner’s insurance cost. Check
on the house listing, if association fees are listed.
Find a mortgage interest rate. (Adjustable or Fixed; 15, 20 25 or 30 year loan) Explain.
1. Calculate the monthly mortgage rate. (You must do this calculation)
2. Calculate the monthly property taxes. (This is not income tax.)
3. Calculate the monthly homeowner’s insurance. (This is not mortgage insurance.)
4. Calculate the homeowner’s association fee (if applicable).
Add the three or four items together. This is your monthly house payment.
Note: Only the first 3 are the bank payment. Item number 4 you will send in to your
homeowner’s association. The bank adds all four to see if you are eligible for the house.
5. Due ____________
Money required at the time of closing (signing the papers)
Find the closing costs for this house. This includes discount points and origination fees. A bank
or an agent can help with this.
The money required at closing is your down payment plus all the closing costs.
Sinking fund/annuity fund
1. Find an interest rate for savings
2. Calculate a sinking fund - How much are the monthly payments for 5 years, using the
interest rate from savings, in order to have the money required at the time of closing?
3. Calculate an annuity fund - How much money will be saved if one uses all the extra
money (#3) every month for 5 years, using the interest rate from #8?
A few paragraphs explaining what you have the difference between the two funds. All
calculations should be shown.
Now that you are finish with most your research and calculations you are ready to write your
report. See paper about the finance project. The following are additional steps that you must do
for your research and paper.
For this paper, you must show the calculations using a standard down payment of 20%. Once the
calculations are done, you may modify the down payment.
The main project: Will the bank approve this loan? If yes, you can afford the house. If no, you
can’t afford the house.
1. Price of the house is no more that 3 times the annual salary (5th-year salary). This is required.
2. Monthly house payment is less than 25% of the monthly gross income (5th-year salary).
3. Down payment and closing costs – Can one save the money in 5 years to meet this amount?
If loan is not approved, explain why and give some options.
1. If it is not approved because of requirement 2:
(a) Recalculate the loan using the maximum house payment. Show what the new down
payment would be, and/or
(b) What is the annual income required for this monthly house payment? Is it obtainable
within a few years?
2. If it is not approved because of requirement 3:
(a) Using a lower amount for the down payment (the amount saved – closing cost = new down
payment), recalculate the monthly payments on this loan. You must purchase mortgage
insurance (when down payment is less than 20%), which is added to your monthly house
payment. With the new figures, will the bank approve the loan?
(b) Save for one or two more years and recalculate these annuities.
(c) How much of a lump sum is needed in order to have the required amount at the time of
closing? (Money needed at closing minus saved amount = additional money needed) How
much does one place into savings upon graduation in order for it to grow for 5 years to
reach the additional money required?
This project is a report. All information is in the report; only the calculations (equations) are put in
the appendix. In other words, I should not have to read the appendix to get any information (e.g.
rent, budget, taxes, interest rate, years, loan, monthly payments, annual or monthly property
taxes, etc.) The above eight assignments are the calculations needed for the paper; they are not
the only things to be included in your report nor the order in which to organize your paper. Your
paper should have an introduction, body and a closing.