ECN201
Assignment: Personal Finance

You have now looked at some of the financial statements you will need to fill out at some time in the future so now it's time to look at some financial problems.   You are to use an on-line web financial calculator to calculate the answers to the following questions. To help you with the calculations you should check out some on-line calculators - Some Financial Calculators can be found in the Data Sources.  I tend to use Bank Rate when doing these type exercises.

Now it is time to use some of the online resources to do some financial analysis.  You are to use those resources to answer the following question which has four parts.

  1. What would be the cost of a house for the "average" American - and what would it cost to finance it. You might want to check out some online realty site and find a city in the US and find out what a nice three-bedroom, two-bathroom home will cost and compare it with something comparable in South County. 

  2. I am interested in refinancing and I am looking for some advice.  I have a fixed-rate 30 year mortgage for $250,000 that I obtained at 8% in January of 2000.  I expect closing costs to be $2,500 and I would like to take out a 30 year mortgage at existing rates that you need to determine.  What do you think about the idea and what is the basis for your idea?

  3. I am interested in refinancing and I am looking for some advice.  I have a fixed-rate 30 year mortgage for $250,000 that I obtained at 8% in January of 2000.  I can't afford a bigger monthly payment but I would like to borrow some money on the equity built up and I think I can do it because interest rates are lower.  Is it possible for me to walk away with $25,000 if I refinance at 7% and have a monthly payment that is no larger than the original one?

  4. I am interested in the relationship between mortgage interest rates and monthly payments.  You are to create a graph with at least 5 data points in which you plot out the relationship between interest rates and monthly payments on a fixed-rate, 30-year $250,000 mortgage. You should keep the interest rates between 5% and 10%.

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