Personal Finance Hw
IET 33400
Name ______________________________
1. As you consider saving for retirement, you desire to supplement the retirement contributions provided by
your employer with your own IRA. Would you select a Traditional IRA or a Roth IRA? Why? As part of your
response, briefly explain the difference between a traditional IRA and a Roth IRA. [20 points]
IRA Choice ________________
Rationale/Differences
2. As part of your long-term personal finance goals, you desire to purchase a house, which you plan to finance.
Choose a USA location (city & state) and indicate the assumed value of the house. As with any loan, your
mortgage payment has two components: principal and interest. Name at least two other expenses that
could be added to your mortgage payment. Do an internet search for your location. About how much would
the other expenses add to your monthly mortgage payment beyond principal and interest? [20 points]
Location: ____________________________________
Assumed value: __________________
Mortgage add-ons: 1) _________________________
Monthly cost: ____________________
2)__________________________
Monthly cost: ____________________
Internet source: ______________________________________
3. You decide to finance the purchase a used $10,000 car with $2500 down, borrowing $7500 from a local
bank at a 6% per year interest rate. You agree to repay the loan in 24 equal monthly payments. The
monthly payment they calculate for you is:
7500 ( 7500 )(.06 )( 2 yrs )
+
= $350
24
24 months
Considering our class discussion on interest and loans, will you decide to accept their loan offer? Why or
why not? [20 points]
Loan decision: _______________________
Rationale: