Buying vs Renting - Various Financial Calculations - Mathematics Assignment Help

Assignment Task:

Objective:

In this project, you will create an Excel Workbook consisting of two worksheets. You will then use it to perform various financial calculations and answer the questions below. Specifically, it will be used to examine whether it is better to buy a home or rent, depending on things such as income, property and income taxes, appreciation, annual percentage rate, etc.

Mortgages and Taxes: Deb and Rusty have just gotten married and wish to buy a home. They both work in Boston and have a combined income of $90,000. They found a modest starter house which they are buying for $350,000. 

1. They plan to use they're $40,000 in savings to cover the closing costs the bank will charge them, 

which are 1% of the amount they borrow from the bank. The rest of the savings will be used as a down payment. For example, if they borrow $330,000 using $20,000 for a down payment, the closing costs will be $3,300, which still leaves them some savings. Determine the largest amount they can use for a down payment and still pay the closing costs. 

2. Open Excel and create a 20-year amortization schedule, giving monthly payments for the amount they borrowed at a 4.5% annual interest rate. Title this worksheet Amortization. For your answer to this question write “See Excel Workbook”. 

3. Use the amortization schedule to compute the total amount of interest they will pay to the bank over the 20 years. 

4. Deb and Rusty know that buying a house will save them money on taxes because they get to deduct the interest they pay to the bank each year and the property taxes they pay each year. First, create a separate worksheet from the amortization schedule. Title this worksheet Analysis. In this worksheet, create a column titled Income starting at $90,000 and increasing at 3% for 20 years. What is their income after 20 years? 

5. Next, create the following columns in your new Excel worksheet. For your answer to this question write “See Excel Workbook”. 

• Property Taxes which are currently $3,100 a year and will also increase by 3% a year. 

• Interest paid to the bank each year (careful here, your amortization schedule is monthly). 

• Yearly Deduction: Do a Google search for Standard Deduction for the current year/married filing jointly 

• Taxable Income (Taxable Income = Income – Deductions)

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