ASSIGNMENT 2

Radhika Bhargava - 100493568

Oluwatosin Faith Olagesin - 100485615

Personal Finance

Chapter 6
Question 2

EAR= 1+

1+

0.05
12

APR m
1
m

12

) 1

1.051161
EAR = 0.05116 = 5.12%
Question 5
Calculating monthly interest on personal line of credit:

30
365
)
5000.05
I =$ 2.05
Interest on principal:

P=BAPR

5000.05
= $25
Daves Total first monthly Loan payment = 25 + 2.05 = $ 27.05

Chapter 7
Financial Planning Problem: Question 2

( 365n )

I=BAPR

Therefore, based on the analysis we would recommend renting.

Financial Planning Problem: Question 5
Affordable Monthly Mortgage Payments
Financial Planning Activities Question 2
The area in which we are comparing the housing option is around UOIT, which is
mostly student rental and a few family homes
Renting
Cost of renting on average around our area is approximately $600
Facilities
o Gym
o Study room
o Laundry room
o Game and TV room
o Storage area
o Closets, carpeting, appliances
o Heating, air conditioning
o Plumbing and water pressure
o Door, locks, windows
o Small to average room size
Features
o Kitchen
o 3-5 bedroom
o 1-2 bathrooms toilet, tub, and sink
o 1 Livingroom
o Elevators
o Balcony
House

Costing of buying a house around our area is approximately $1500 for

mortgage per month
Facilities
o Low scale appearance of neighborhood
o Condition of streets and sidewalks is good
o Outdoor light is available
o Condition of porch is good
o Appropriate drainage system
Features
o 3-5 bedrooms
o 3-4 full bathrooms toilet, sink, tub
o 1-2 half bathrooms- sink and toilet
o Kitchen
o Basement
o Living room
o Family room
o Garage
o Driveway
o Backyard
o balcony

Chapter 10
Question 2

a) 1000 * 0.095 = $95

The annual dollar amount of interest that you receive the bond investment is $ 95.
b)

$95 *0.08 = $ 1187.50

Therefore, the approximate dollar price would sell my bond at is
$1187.50, if the comparable bond is paying 8%.

c) The value of my bond increased because the comparable bond is priced at a

higher cost. People would rather buy my bond at $1000 than a comparable
bond which is more expensive. When interest rate decreases the demand for
that bond increases, simultaneously the price of that bond increases as well.
Financial Planning Activities Question 4