Option #1: Consumer Mathematics #1
Write a report that answers the following questions and
meet the list of requirements that follows.
Each of the problems you will be solving requires using your calculator to solve a financial equation. In order to calculate answers correctly, it is important that you follow several important rules:
- Follow the Order of Operations to solve complicated problems.
- Attempt to solve equations without writing down intermediate values. If you must write down values, keep as many digits or decimal places as you can. Better yet, use the memory locations in your calculator to store intermediate values.
- NEVER round intermediate calculations. Only round the final answer.
Several excellent videos that describe how to solve algebraic expressions using the Order of Operations Rules are available at mathispower4u.yolasite.com. After reaching the Mathispower4u site, click on the Algebra 1 Video Library link and find the Order of Operations section in the first column. The first twelve short videos will give you an excellent overview. The next twelve may also be helpful.
The questions in this assignment involve calculations related to simple interest, compound interest, annuities, or mortgages. Your introduction should provide background information about these topics, describing their use and importance.
- Simple Interest: Jack borrowed money to finance his new business. Private investors offered Jack $28,000 of the $35,000 he needed. To make up the difference, Jack secured a small business, simple interest loan. Jack’s loan was structured as an installment loan and required him to pay $297.50/month for 30 months. Calculate the amount financed, total installment price, the finance charge, and the interest rate.
- Annuity Payment: Bruce is saving money to open a Hispanic food franchise. He needs $15,000 in two years to make his down payment and is investing in an annuity yielding an annual interest rate of 7% compounded monthly. If the annuity requires that Bruce make monthly investments, what annuity payment must Bruce make to save $15,000?
- Mortgage Financing: Samantha purchased a $129,000 home with 30-year term, 6% rate mortgage. At closing she paid a $10,000 down payment, requiring her to purchase private mortgage insurance (PMI) at a cost of $25 per month. Calculate Samantha’s monthly mortgage plus PMI payment.