Introduction to Personal Finance Unit 5 Project PDF

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Introduction to Personal Finance
Unit 5 Project. I took the class during summer and over a distance course schedule....

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Introduction to Personal Finance Unit 5 Project Learning Goals:  Understand the concepts of saving and investing and how it relates to human and financial capital accumulation.  Understand how liquidity, risk, and return impact banking and investment products. 1. Josh is not sure if he should attend college or not. Part of his decision will be based on the return on investment of college. a. He estimates that the per year cost to attend Texas Tech including room and board is $27,750. He also assumes the cost will rise by 5.5% per year. How much is a 4-year degree going to cost Josh? N I/Y PV PMT FV

4 5.5% 0 -$27,750 $120,497.89

b. Josh recognizes that not only will he have the costs of attending school, but he will also be giving up a salary while he attends school. He figures the average salary for those with only a high school diploma is $30,000. He assumes he would receive a 2.4% cost of living raise each year. Determine how much money he will forgo while attending school. N I/Y PV PMT FV

4 2.4% 0 $30,000 $124,390.53

c. Josh adds the cost of college with the salary he will forgo by attending college, he finds it will cost: ________$244,887.43__________ in total. (Keep in mind that this does not include any interest on loans needed to pay for school.) d. To help him determine if it really is worth it to get a college education, Josh wants to see what the return on investment (ROI) will be 20 years after he graduates. After some research, Josh discovers that for him career choice he can expect to earn $2 million with a degree and $900,000 without one. What is Josh’s 20-year ROI? (Hint: Use TVM and solve for I/Y.) N I/Y PV PMT FV

20 7.8% -$244,887.43 $0 $1,100,000

e. Is this a good ROI or not? List at least 3 other factors besides ROI that John should consider. Josh has a good ROI with 7.8 percent.

1. He must determine the cost of living both in and out of college. 2. He must consider other schools with different tuition payments and possible scholarships. 3.He must also consider other career choices with different rates of pay. 2. Identify at least 3 different job postings that you would be interested in using websites such as monster.com, indeed.com, careerbuilder.com, payscale.com, indeed.com, salary.com and others. Research and report on the starting salary, at least 3 of the responsibilities, and identify at least 2 qualifications for the job (degrees, certifications, etc.). Job Title Financial Planner

Loan Officer

Loan Originator

Starting Salary Range $69,815 plus a yearly commission of $38,500

3 Responsibilities

1. Investing for clients (portfolios) 2. Managing wills and estates 3. To be successful, a vast social network $181,917 plus a 1. Help borrowers to yearly commission of acquire loans $24,000 2. Be fluent in the banking industry 3. Again, a vast social network

$249,329 plus a 1. Attention to detail yearly commission of 2. Be decisive with applicants’ financial $27,600 information 3. Finally, a vast social network Career website sources used in your search: indeed.com

2 Qualifications 1. Bachelor’s in Certified Financial Planning 2. FINRA license

1. Bachelor’s in finance, business, or economics 2. Get licensed as a Mortgage Loan Originator and certified through the Mortgage Bankers Association (MBA optional) 1. Bachelor’s in finance, business, or economics 2. Pass the SAFE MLO test and get licensed as a Mortgage Loan Originator...