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Bennie Waller wallerbd@longwood.edu 434-395-2046 Longwood University 201 High Street Farmville, VA 23901

Bennie Waller wallerbd@longwood.edu 434-395-2046 Longwood University 201 High Street Farmville, VA 23901. The development of this course was partially funded by an education grant from Dominion. DISCIPLINE : The ability to forego today what many can have to have tomorrow what so few can.

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Bennie Waller wallerbd@longwood.edu 434-395-2046 Longwood University 201 High Street Farmville, VA 23901

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  1. Bennie Waller wallerbd@longwood.edu 434-395-2046 Longwood University201 High StreetFarmville, VA 23901
  2. The development of this course was partially funded by an education grant from Dominion
  3. DISCIPLINE: The ability to forego today what many can have to have tomorrow what so few can.
  4. Student evaluation - Students will be evaluated on his/her performance on quizzes, examinations and projects.
  5. Ms. Cherry Hedges, VACU Financial planning exercise
  6. BREAK
  7. Remaining material TVM Loans, Credit Cards, Mortgages, Auto Insurance Investments, Stocks, Bonds, Mutual Funds Consumer Decision making, Consumer protection Retirement
  8. Time Value of Money TVM Spreadsheet TMV Magic
  9. Overview of Calculator
  10. ENTER key Compute (CPT) Key Payment key Present Value key Future Value key I/Y = interest rate N =number of periods CE/C Clear key Source: wikipedia.com
  11. HINT on organizing results FV = PV = N = I = PMT=
  12. Calculator Solution Financial Formula Solution
  13. Present Value of an Annuity –
  14. Example: If you were to win the lottery worth $1 million to be paid out over the next 20 years at $50,000 per year.   Assuming that your opportunity costs is 15%, how much is the $1 million worth today? PV = 312,967 FV = 0 N = 20 I = 15 PMT= 50,000
  15. Financial Trivia Financial Trivia Spending Trivia Paycheck Trivia Etiquette Trivia Financial Football Financial Soccer
  16. Time Value of Money - The idea that money available at the present time is worth more than the same amount in the future due to its potential earning capacity. This core principle of finance holds that, provided money can earn interest, any amount of money is worth more the sooner it is received. Money received sooner rather than later allows one to use the funds for investment or consumption purposes. Which would you rather have -- $100 today or $100 in 1 year? NOT having the opportunity to earn interest on money is called OPPORTUNITY COST.
  17. Present Value of a lump sum
  18. Future value of a lump sum
  19. Present value of an annuity
  20. The “five Cs” of credit to determine creditworthiness include: Character: reflects stability in your lifestyle. Capacity: reflects the relationship between earnings and debt. Capital: reflects the level of savings and investments held. Collateral: reflects the availability of assets for security, should you default on the loan. Conditions: reflect the possible impact the current economic situation.
  21. Before making your purchase; Maintenance costs – more for used cars Operating costs - Insurance - much higher for a sports car Warranties Rebates and interest rate promotions Test drive the car Reconsider extended warranties and other add-ons Sources for information include Nada.com Kbb.com Consumerreports.org
  22. Alternatively, assume that you can obtain a $23,000, 4 year loan from an auto company running a promotion at 3% for customers with excellent credit. What would your monthly payment? PMT= 509.09 PV = -23000 FV = 0 N = 4x12=48 I = 3/12 = .25 Monthly Payment = 509.09 Total Payments = $24,436.30 Interest Payments = 1,436.30
  23. If purchasing a home, you are likely to incur significant one-time costs such as Down payment Loan points Application/credit/origination fee Application fee Appraisal, title, attorney, home inspection fee Title insurance Recurring costs PITI Maintenance Repairs
  24. With 20% you will have to pay private mortgage insurance
  25. Factors to consider Interest rate Size of monthly payment Term of mortgage
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