Part A: You are to track Tim’s monthly cash flow. You are to answer a series of questions. Please...

Part A: You are to track Tim’s monthly cash flow. You are to answer a series of questions. Please answer the questions in the given space provided . [0.5 point] Tim’s salary is $38,000 a year. This is his gross yearly salary; his salary before taxes is deducted. What is his gross monthly income? [0.5 point] Suppose 25% of his salary is taken out for taxes. How much tax does Tim pay each month? [0.5 point] Compute Tim’s monthly take-home pay. This is his net pay; the actual amount available to Tim from his paycheck. Tim decides it’s time to buy a house. Buying a house depends on many factors such as interest rates, length of the loan, down-payment, your credit worthiness, etc. Typically your monthly mortgage payment accounts for 30% of your gross monthly income. We have two scenarios to consider: This requires the monthly payment formula: Amt x R(1+R)t where R=APR/12. (1+R)t-1 He finds a house for $140,000. Tim can afford a down-payment of $8,000. 4. [0.5 point] What is the size of the mortgage he needs to obtain from the bank to purchase his house? Scenario 1: [1 point] If Tim has good credit, he will be able to finance the mortgage amount at 5%, compounded monthly for 30 years. How much will his monthly mortgage payment be? [1 point] The bank also offers a different scenario: finance the mortgage amount at 4.375%, compounded monthly for 15 years. How much will his monthly mortgage payment be? Scenario 2: c. [1 point] If Tim does not have good credit, he will be able to finance the mortgage amount at 7%, compounded monthly for 30 years. How much will his monthly mortgage payment be? d. [1 point] The bank offers a different scenario where he finances the mortgage amount at 6.5%, compounded monthly for 15 years. How much will his monthly mortgage payment be? Tim does have good credit, so he decides to go with Scenario 1a . How much will his monthly mortgage payment be? [0.5 point] Property taxes are $3300 a year. The bank will spread this amount over 12 months and include it into your monthly mortgage payment. This is called ESCROW. How much is Tim’s escrow payment? [0.5 point] Now that you bought your own home, you need to protect it. You purchase homeowner’s insurance, which is a yearly charge of $300. You budget for monthly payments. How much is your monthly homeowner’s payment? [0.5 point] Water, electricity, trash pickup, and natural gas are other expenses that cost additional money each month. Tim spends $30 per month for water and trash, $60 per month for electricity, and $44 per month for natural gas. How much does he spend total for these utilities? 9. Tim’s cell phone bill is $45 a month. 10. TV service and internet costs $90 a month. [1 point] A general rule for savings is you should save at least 8% of your take-home income. Tim decides to save 4% of his take-home income. How much is he putting towards his savings each month? [3 points] Another rule of thumb is you should have at least 3 months worth of your take- home income in your savings incase you lose your job or an emergency occurs. How much is 3 months worth of take-home income? 3 months worth of take-home income: Let’s not forget about food. After a month of tracking his food spending, he finds he spends $70 on restaurants and $200 on groceries. [1 point] Tim borrows $8,000 to buy a car and have it paid off in 6 years. Since he does not have good credit, he finances the car at 4.5%. What is his monthly car payment? [0.5 point] Now that you have a car, you have to purchase car insurance. You buy a policy that costs $900 per year. You pay your insurance bill monthly. What is his monthly car insurance payment? You can’t drive your car without purchasing gas. After tracking a month’s worth of spending, Tim finds he spends $95 a month in gas. Tim finds he spends $40 a month on new clothes and $100 a month on entertainment. Tim also has some credit debt. He currently spends $75 per month on his credit cards. After graduating from college, Tim started paying back his student loans. His monthly student loan payment is $120 per month.