Camy Wang works at UTSC and her take home pay is $5000 per month after taxes...
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Camy Wang works at UTSC and her take home pay is $5000 per month after taxes and other deductions. She expects her take home pay to rise at 2% per year for the next several years. She should start paying off her student loan of $30,000. The interest rate on the loan is 3% per year compounded monthly and should be paid off within the next 4 years. She would like to purchase a new car for $35,000 and will finance the purchase price of the car with a 5 year loan at an interest rate of 3.6% per year compounded monthly. Her rent is $1000 per month expected to rise at 2% per year. She spends $1500 per month on food clothing, transportation, etc. This amount is not expected to change for the next several years. Ever year during Christmas break she would like to go on an overseas vacation costing $4,000 each time. She will invest her savings in a well-diversified growth portfolio growing at an average rate of 0.4% per month. Her marginal tax rate is 30%. a. How much will Camy have saved by the end of 4 years? b. What does the answer to part (a) tell you that she should be doing to be most efficient with her money, while not sacrificing any consumption? Camy Wang works at UTSC and her take home pay is $5000 per month after taxes and other deductions. She expects her take home pay to rise at 2% per year for the next several years. She should start paying off her student loan of $30,000. The interest rate on the loan is 3% per year compounded monthly and should be paid off within the next 4 years. She would like to purchase a new car for $35,000 and will finance the purchase price of the car with a 5 year loan at an interest rate of 3.6% per year compounded monthly. Her rent is $1000 per month expected to rise at 2% per year. She spends $1500 per month on food clothing, transportation, etc. This amount is not expected to change for the next several years. Ever year during Christmas break she would like to go on an overseas vacation costing $4,000 each time. She will invest her savings in a well-diversified growth portfolio growing at an average rate of 0.4% per month. Her marginal tax rate is 30%. a. How much will Camy have saved by the end of 4 years? b. What does the answer to part (a) tell you that she should be doing to be most efficient with her money, while not sacrificing any consumption?
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Question a Student loan 30000 pv 3 compounded monthly 48 month payments would be 66403 This calculat... View the full answer
Related Book For
Foundations of Financial Management
ISBN: 978-1259194078
15th edition
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen
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