# FP 101 Week 5 Buying Major Assets Worksheet

FP 101 Entire Course Link

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FP 101 Week 5 Buying Major Assets Worksheet

1. Complete the “Buy or Rent” calculator using your own data. In 50-100 words answer the following: What was the recommendation? What were the factors that led to that recommendation? Do you agree or disagree with the recommendation? Why?

http://www.bankrate.com/calculators/mortgages/rent-or-buy-home.aspx

2. In a minimum of 100 words, explain the main benefits and drawback of renting and of owning a home?

3. Review Exhibit 7-4. In at least 100 words, summarize the steps in the home-buying process.

4. Review Exhibit 7-6. Estimate the affordable monthly mortgage payment, the affordable mortgage amount, and the affordable home purchase price for the following situation.

· Monthly gross income: $2,950

· Other debt, monthly payment: $160

· Down payment to be made: 15% of purchase price

· Monthly property tax and insurance: $210

· 30 year mortgage at 6%

NOTE: With a down payment of at least 5% lenders use 33% of the gross income as a guide for PITI (principal, interest, taxes, and insurance)

1. Review Exhibit 6-2. In at least 100 words, summarize the steps in the car-buying process.

2. Using the framework on page 199, prepare a financial comparison of buying and leasing a car with a cash price of $24,000. Show your calculations.

· Down payment (to buy/finance): $4,000

· Monthly loan payment: $560

· 48 month loan and lease

· Value of vehicle at end of loan: $7,200

Instruction: Complete the chart below to calculate the cost of buying a car.

Instruction: Complete the chart below to calculate the cost of leasing a car.

· Security deposit (to lease): $1,200

· Monthly lease payment: $440

· 48 month loan and lease

· End-of-lease charges: $600

https://uopcourses.com/category/fp-101/

FP 101 Week 5 Buying Major Assets Worksheet

**Complete**the Buying Major Financial Assets Worksheet.**Submit**your assignment to the Assignment Files tab.**Buying Major Financial Assets Worksheet****Home Buying**1. Complete the “Buy or Rent” calculator using your own data. In 50-100 words answer the following: What was the recommendation? What were the factors that led to that recommendation? Do you agree or disagree with the recommendation? Why?

http://www.bankrate.com/calculators/mortgages/rent-or-buy-home.aspx

2. In a minimum of 100 words, explain the main benefits and drawback of renting and of owning a home?

3. Review Exhibit 7-4. In at least 100 words, summarize the steps in the home-buying process.

4. Review Exhibit 7-6. Estimate the affordable monthly mortgage payment, the affordable mortgage amount, and the affordable home purchase price for the following situation.

· Monthly gross income: $2,950

· Other debt, monthly payment: $160

· Down payment to be made: 15% of purchase price

· Monthly property tax and insurance: $210

· 30 year mortgage at 6%

**Enter your calculation and response in this column****Step 1**. Determine the monthly gross income (annual income divided by 12).**Step 2**. Multiply step 1 by 33% for a PITI (principal, interest, taxes, and insurance) guideline.NOTE: With a down payment of at least 5% lenders use 33% of the gross income as a guide for PITI (principal, interest, taxes, and insurance)

**Step 3**. Subtract other debt payments from the result of Step 2 to determine the*Affordable Monthly Mortgage Payment.***Step 4.**Divide the result of Step 3 by 6.00 (this is the mortgage payment factor from Exhibit 7-7 based on a 30 year loan at 6%) and then multiply this by $1,000. This is the*Affordable Mortgage Amount.***Step 5.**Divide the affordable mortgage amount by .85 (This is 1 minus the down payment percentage) to determine the*Affordable Home Purchase.***Car Buying**1. Review Exhibit 6-2. In at least 100 words, summarize the steps in the car-buying process.

2. Using the framework on page 199, prepare a financial comparison of buying and leasing a car with a cash price of $24,000. Show your calculations.

· Down payment (to buy/finance): $4,000

· Monthly loan payment: $560

· 48 month loan and lease

· Value of vehicle at end of loan: $7,200

Instruction: Complete the chart below to calculate the cost of buying a car.

**Steps to Buying a Car taken from “Figure it Out” on page 199****Enter your calculation and response in this column****Step 1**. Total down payment**Step 2**. Total cost of payments: Multiply the*Monthly Loan Payment*by the*Length of the Loan***Step 3**. Identify the opportunity cost of the security deposit: Multiply the*Security deposit*by the*Length of the Loan*by 3%**Step 4**. Add the result of Step 1, 2 and 3.**Step 5.**To determine the total cost of buying subtract the*Value of the vehicle at the end of the loan*from the result of Step 4.Instruction: Complete the chart below to calculate the cost of leasing a car.

· Security deposit (to lease): $1,200

· Monthly lease payment: $440

· 48 month loan and lease

· End-of-lease charges: $600

**Steps to Leasing a Car taken from “Figure it Out” on page 199****Enter your calculation and response in this column****Step 1.**Multiply the*Monthly Lease Payment*by the*Length of the Lease***Step 2**. Identify the opportunity cost of the security deposit: Multiply the*Security deposit*by the*Length of the Lease*by 3%**Step 3.**To determine the total cost of leasing add the results of Step 1 and 2 to the End-of-Lease Charges
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