d MMfinancial Calcs Weekly Component 2 updated - Protected View - Saved - Search Mailings Review View Help viruses. Unless you need to edit, it's safer to stay in Protected View Enable Editing FACS 3372 WEEKLY COMPONENT (10 PTS TOTAL) TIME VALUE OF MONEY AND MONEY MANAGEMENT CALCULATIONS Today, I'd like you to imagine you're a mortgage specialist working for Central Arkansas Finance in Conway. Hector and his wife Maria are interested in buying a second home together, which they plan to use for rental income. You can assume they pool their income jointly as a couple. Help them evaluate their financial standing by working through a few financial calculations. Here are Hector & Maria's info: > Hector earns $84,000 and Maria earns $62,300 in gross (before-tax) income annually They place $620 per month into savings. Their joint monthly debt payments (which includes their current mortgage) is $2,545. Their other monthly expenses are $1300 Their liquid assets are $3,000 in savings and $900 in their checking account Net income is 73% of gross income **SHOW ALL WORK TO RECEIVE PARTIAL CREDIT 1) What is Hector & Maria's joint gross monthly income (round to nearest dollar if needed)? **SHOW ALL WORK TO RECEIVE PARTIAL CREDIT** a 15 ences Mailings Review View Help en contain viruses. Unless you need to edit, it's safer to stay in Protected View. Enable Editing 2) What is their Debt-to-Income ratio as a couple (see slides for formula!) **SHOW ALL WORK TO RECEIVE PARTIAL CREDIT**? 3) Based on the ratio you calculated in #2, do you think they will be able to qualify for a mortgage for their second home? Why or why not? 4) What is their savings ratio as a couple? **SHOW ALL WORK TO RECEIVE PARTIAL CREDIT** 5) How does their ratio in #4 above compare to the rule of thumb for savings ratios? 6) What is their liquidity ratio as a couple? "SHOW ALL WORK TO RECEIVE PARTIAL CREDIT Focus C53372-TVM and MMfinancial Calcs Weely Component 2-updated. Protected ViewSaved e search References Mailings Review View Help met can contain viruses. Unless you need to edit, it's sale to stay in Protected View. Enable Editing 7) Based on the liquidity ratio you calculated in #5, how many months of living expenses could be paid if this couple lost their employment? Time Value of Money Future Value of a Lump Sum 8) If Hector and Maria were to deposit their $3,000 today into a Capital One 5-year CD, with an interest rate of 3%, what would be the future value of their money at the end of the CD term? Round down or up to the nearest dollar if needed, "SHOW ALL WORK TO RECEIVE PARTIAL CREDIT" Time Value of Money Present Value of a Lump Sum Hector and Maria decide they should wait 5 years before buying a second home. They estimate that in 5 years, they will likely have to pay $120,000 for their second home. In order to take out a mortgage in the future, Hector and Maria would need to make a 5% down payment 9) What is 5% of $120,000? Calculate this -- this is their down payment: O i arch Can FACS3372TM and financial Calcs Weekly Component updated Protected ViewSaved. Layout References Mailings Review View Help from the wennet can contain wiss Unless you need to edit, se to stay in hotected View Enabled Time Value of Money Present Value of a Lump Sum Hector and Maria decide they should wait 5 years before buying a second home. They estimate that in 5 years, they will likely have to pay $120,000 for their second home. In order to take out a mortgage in the future, Hector and Maria would need to make a 5% down payment. 9) What is 5% of $120,000? Calculate this--this is their down payment: 10) How much should Hector and Maria deposit today in a 5-year high yield CD (which has an interest rate of 4.15%), so that in the future, they have their down payment from #9 above)? Round down or up to the nearest dollar if needed. *SHOW ALL WORK TO RECEIVE PARTIAL CREDIT o BI