Financial Project-           

As an Ivy Tech student, you are making an investment in your education. This project will look at how that investment will pay off if you graduate and get a job in your desired field.

Assume that the median annual income for a high school graduate is $25,000. This is the value that you will be comparing your expected salary and lifestyle to in the following areas:

1) Income Comparison: Research your expected income after you graduate college. Assume you obtain whatever level of education needed to enter your desired area of employment and that you will have a salary equivalent to the annual Median salary found at: http://www.bls.gov/oes/current/oes_in.htm#27-0000*You will need to click on your desired career in order to see the Annual Median wage.

• Your reflection paper should explain what your desired area of employment is and what the median annual salary for that position is.
• Your reflection paper should contain at least one statement comparing your expected salary with that of the median income of a high school graduate.

2) Housing Comparison: Assume that you and your high school graduate counterpart plan to spend 28% of your gross income on house payments. Look up the current fixed rate APR for mortgages and use Excel to determine the largest value of a house that each of you can afford under those conditions.

• Your reflection paper should contain at least one statement comparing the value of the house that a high school graduate can afford and that you expect to be able to afford.
• Explain in your reflection paper what Excel function was used for these calculations. Cite what source you used to find mortgage rates.
• Research housing costs in an area where you would like to live, will your future salary allow you to afford the house you want? Cite what source you used to find housing costs.
• Reflect on the values you found. Do these values meet your needs and expectations, or should you consider other housing options?

3) Retirement Comparison: Assume that your401k investments will earn a 7% annual return and that you will set aside 5% of your gross monthly income for 401k investment. Use Excel to determine the balance on such a 401k after 40 years of investment for the high school graduate and for your expected income. Financial planners recommend having 70% of your gross annual income to live off of for each year in retirement. How many years will you and your high school counterpart's 401k savings last, if you use the 70% recommendation?

• Your reflection paper should contain at least one statement comparing the value of the 401k investment of the high school graduate and for your expected salary.

• Explain in your reflection paper what Excel function was used for these calculations.
• Determine how long you and the high school graduate will be able to live on your 401k savings and explain how you determined this.
• Reflect on the values you found, do these values meet your expectations, or will you change your investment strategy?

4) Raises: The high school graduate's income is not expected to increase over the next five years, but assume that your field will guarantee you a 2.5% raise on your annual salary each year for the next five years. Determine what your new annual salary will be given these five years of raises. Using this new income, recalculate the mortgage from part 2. Also recalculate the 40 year 401k information from part 3 using this new income (use the new income and 40 years for this, don't worry about the complication of 5 years of changes).

• Your reflection paper should contain at least one statement comparing your initial salary with the salary after 5 years of raises.
• Your paper should explain how you determined the increased salary.
• Your paper should address how your increased salary might impact your mortgage and 401k values.

Quiz-

1. The table below shows the percent of people of all ages in poverty in the U.S. and Indiana.

a) Find the Absolute Change in the percent of people living in poverty in Indiana from 2001 to 2011.

b) Find the Relative Change in the Percent of those living in Poverty for the state of Indiana from 2001 to 2011.

c) Use the Relative Change you found in part b to write a sentence explaining the change.

1. You are charged $13.21 total for a meal. If the sales tax is 7%, how much was the menu price of the meal?

2. An item that normally sells for $220 is marked down by 40%. What is the sale price?

3. Gas prices are down 8% this month

a) If the price at Family Express was $3.25 last month, what is the price now?

b) If the price at Speedway is $3.05 this month, what was the price last month?

1. According to the Ivy Tech website, students will pay a $60 technology fee and $121.50 per credit hour for Spring 2015.

a. Set up a linear model to calculate a student's bill based on this information.

b. The independent variable in my model is ______and it represents __________.       

c. The dependent variable in my model is _____ and it represents __________.             

d. Use your model to determine how many credit hours a student is taking if his bill is $1639.50.

2. A can of soda costs $0.10 in 1972 and $1.25 in 2012.

a. Construct a linear model that can be used to predict the cost of a soda in a given year. b. Use your linear model to predict the cost of a soda in 2014.

3. A scatter plot was made using data on tuition at public two-year colleges from 1964-2011 and a linear trend line was added. The equation and R2for the trend line is in the textbox on the graphic. Data from: http://nces.ed.gov/fastfacts/display.asp?id=76

4. What is the independent variable in this model, and what does it represent?

5. What is the dependent variable in this model, and what does it represent?

6. Use the trend line equation to predict tuition costs for 2014.

7. Find the r value for this regression line. What does it tell you about the accuracy of model?

8. Interpret the meaning of the slope of the trend line.

9. Should we use the linear model to predict tuition for 2025? Why or Why not?

1. To celebrate Ivy Tech's anniversary, a landscaper puts 50 water lilies in a pond the week before classes start. Unfortunately, every lily splits and produces a second lily once a week.

a. Fill out this table for the number of lilies for the first few weeks:

b. Write an equation to find the number of lilies in a given week.

c. Use your equation to find the number of lilies that will be in the pond by week 16?

2. The landscaper pours 200 gallons of herbicide in the pond.

a. If the herbicide degrades 10% each week, how much will be in the pond after 1 week?

b. Write an equation to find the amount of herbicide in any given week.

c. The landscaper will put another dose in the pond when the herbicide level reaches 50 gallons. In how many weeks will he need to add more herbicide?