Tuesday, May 6, 2008

May 5th Scribe Post

Hey guys, this is my 3rd scribe post..
Today we mostly got caught up in conversations about different things and with the firedrill..
Other than that we went through a couple of warmups and onto a new aspect on our current unit of personal finance.
The lesson we started to learn today was about owning or leasing cars - which one would be better to do?

One of the warmups we started off with was this one on loans:

You start off by inputting the data that you know into the correct places in application TVM Solver.
In this problem, we are given the:
PV ($8250 loan);
I% (8.9%)
P/Y C/Y (compounded monthly)
N (loan repaid in two years [ 24 monthly payments ]

Remember that PV is kept as a positive number this time because since you are loaning money, you are GAINING money that's practically in your pocket rather than investing money that won't be in your pocket.
Use the solve function to find the monthly payment for the loan (PMT).
To find the COST OF THE LOAN multiply the PMT (that you just found) by the # of payments.
To find the INTEREST PAID take the cost of the loan (that you also just found) and subtract it by the previous value (PV).

On these car problems~~ You have to keep in mind that:
When buying a car... You MUST pay;

PST (7%) + GST (5%) when purchasing a NEW car [ 12% tax total ] &
PST (7%) ONLY when purchasing a USED car.

Let's look at the first problem that was given to us on this lesson..

Jeff had to pay $21616

-Simply, Jeff is buying a NEW car (12% tax) and selling off his older car to a dealership or somewhere.
-Remember to calculate taxes he must pay AFTER subtracting the cost of the Dodge first because he only has to pay tax on the new Chevy truck that he is buying, not something he is trading in.
***$19300 is being multiplied by 1.12 because that is 12% OF the value + the current value so you won't have to do extra steps on your calculator.***


The car is worth 32.77% of it's original value in 5 years.
(since the value of the car was not given we found the % of what the car would be worth instead)

-Because the car constantly decreases in value by 20% every year (due to the way things are in this world) , what's left of the car's value each year is 80% of it...

-So you take 100, multiply it by 0.80 (80%) five times to get the answer for 5 years.

And think about it, if it decreases in value 20% every year, it WON'T be worth nothing in 5 years because its always dealing with a different number. Not stacking up the 20%'s up to 100% of the value.

That's it, that's all.

Thanks for volunteering as the next scribe . . . .