Homework #9



What Are You Doing: You will be calculating a car payment as well as the value of the vehicle after certain time periodsWhy Are You Doing It:The ability to calculate your debt load is critical to maintaining a healthy financial life. Most people will carry an auto loan at some point in their life and that debt can and frequently does prevent people from achieving financial health and security. How Are You Going To Do It:You will be picking a “dream car” and a “reality car”. You will then be calculating car payments as well as the value of the cars after a set time period.Figure out the Make, Model and Year of the carsResearch cars. Pick one that would be your “dream car of all time” and another that is more likely. Figure out purchase pricesIf you purchase a new car then you will need to find the MSRP. In general, this can be found at the manufacture’s website. If you purchase a used car, you will need to find the Kelley Blue Book price for the car. You can find this at . Also, searching on Craig’s List will help you with this. For mileage, remember that the average American drives 14,000 mile a year.Calculate your paymentsAssuming that you will put a $500 down payment on the car, calculate the payment using the formula discussed in class. You will have to find research interest rates and then calculate payments based on different loan terms – 36, 48, 60, and 72 months. You may NOT have a loan with a term that exceeds 72 months. Most auto loans are 3 to 5 years.Calculate the value of the vehicle.Assuming a 20% rate of depreciation, calculate the value of the vehicle (from its original cost) at 1, 3, 5, and 10 years.Looking at the value of the vehicle as time goes on, what conclusions can you draw? Also, why does the value of a car decline in that manner?Research the average annual maintenance cost of your vehicle (oil changes, regular service, tires, etc.)Research the “safety rating” of your vehicle. What You Have To Turn It:You will be required to turn in:A complete list of all your calculations by section. This should be well organized and NEAT. It should show all of your work and calculations. Write a reflection on your findings. Based on your budget, can you afford the car you chose? Does your vehicle choice work for how you live (hauling toys, camping, road trips, etc.) Does your choice work if there is a change in your living situation (ie, if you move to a different location, if you start a family, etc.). ................
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