MAT 108 – Unit 4 – Consumer Mathematics Project
Chapter 11 is titled “Consumer Mathematics”, with a focus on: percents, personal loans and simple interest,
compound interest, installment buying, and buying a house with a mortgage. Instead of a cumulative Chapter
Test, you will be working on a cumulative five-part project that will instead count as your Test 2 grade. Each
part of the project will be worth 20% of the test grade.
Although it is a cumulative five-part project, each part of the project will need to be submitted separately by
the due dates with the following information:
1) Name(s)
2) Part number and Section number
3) Calculations – For problems where calculations are required, write out the calculation as well as
the answer. You do not have to show the steps needed to complete the calculation if you use a
calculator.
4) Questions – All questions must be answered in complete sentences.
You may choose to work alone on this project or you may choose to work with a partner. If you work with a
partner, all work that is submitted for the project must have both partner names and both partners will
receive the same overall grade for the project.
Project Tips
Please note that all work must be neat, legible and organized.
You may choose to hand-write or type your project, but if you choose to write your project, there should be
NO cross-outs.
Read each question and answer it completely and in complete sentences.
Academic Integrity Statement:
You will be given time in class to discuss this project with some of your classmates. Feel free during this
time to help each other read and understand the questions. When it comes to submitting this project for an
individual grade, your written answers should be your own. You cannot copy the exact sentences that
another student has written as an answer to a question and represent this as your own work. Please see
MCCC’s website for the full Academic Integrity Policy.
Grading
This project is equivalent to 1 test grade, which is 20% of your overall semester grade.
You overall grade will be based on the following:
1) Part I – DUE MARCH 14TH
- 19 points
2) Part II – DUE MARCH 14TH
- 20 points
3) Part III – DUE MARCH 28TH
- 28 points
4) Part IV – DUE MARCH 28TH
- 23 points
5) Part V – DUE APRIL 2ND
- 29 points
6) Project presentation sheet – DUE APRIL 2ND
- 11 pts
Part I – Start with a salary!
DUE MARCH 14TH
(Section 11.1 – HW problems: page 654, #29-41,45,53,57,59)
1) Pick a salary – You will have three chances to pick a salary. Once you know what your salary is, please
register your salary with the instructor. _______________
2) As an independent person, your salary will be divided among many categories. Identify the dollar
amounts that are represented in each category. Note that you will have to determine the percent
amounts as well as the dollar amounts for the two disposable incomes. 12 pts
Income Taxes – 30%
Health insurance – 3%
Food – 3%
Housing – choice of either mortgage (25%) or rent (15%)
Utilities – 2%
Disposable income – x% (small amount – you’ll need to figure this out!)
Disposable income – y% (large amount – you’ll need to figure this out!)
3) Use the above categories to construct a circle graph demonstrating how your salary will be used in
general (for the year). Make sure to label everything – percent amounts and dollar amounts. 7 pts
(If you can access a computer, you might want to construct your own circle graph using Microsoft Excel!)
Part II – Make a personal loan (aren’t you nice!). Think short term. How much can you afford and what are
you looking to gain?
DUE MARCH 14TH
(Section 11.2 – HW problems: page 665, #25-31 and page 717, #25,27)
List your salary _____________________
Identify your two disposable income amounts: __________________ _____________________ (2pts)
You have a friend who needs a short-term loan and you are in a good mood today. You have just gone over
your expenses (for the year) and can afford to give some money to a friend, especially since you will get the
money back with interest.
Your friend needs to buy:
- Books for college
- Brakes for car
- New tires (4) for car
- Laptop computer
- Tablet (ipad or similar)
- Cell phone
1) What does your friend need to purchase? Pick one of the above items and find an advertisement or
flyer that shows the cost of your friend’s purchase. You must include this printout or flyer in your
project. Highlight the item and the cost on your printout (or flyer). 2pts
2) How much is the personal loan for? 2 pts
3) What is the term of the loan? This is YOUR decision. It must be no more than 3 years and no less than 3
months. 2pts
4) What is the rate of your loan? You must decide on the rate of the loan by choosing a current personal
loan rate online. Print a copy of the current personal loan rate and include it in your project. Highlight
the interest rate on your printout. 2 pts
5) How much will your friend pay you in interest? Show your calculation. (Keep in mind that your friend is
paying simple interest!) 5pts
6) Once the loan is paid back in full, how much money will your friend pay including interest? Show your
calculation. 5 pts
Formula(s) needed:
Part III – Investment time!
(Section 11.3 – HW problems: page 675, #19-29,35,39,41)
DUE MARCH 28TH
List your salary _____________________
Total amount earned on personal loan (including interest) : __________________ (2pts)
Karma! You now have some extra money to invest. You are going to use the money you earned from the
personal loan and invest it for 10 years in a savings account.
1) How much of the money that you made from the personal loan are you going to invest?
(Think about how much money you made. You can invest all of it or you can invest some of it, but you
can only use the money you earned from the personal loan.) 2 pts
2) You will be placing this money in a savings account that compounds monthly (for ten years!). Find and
print an advertisement for an interest rate for a savings account that you are going to use for your
savings account that will compound monthly. Highlight the interest rate on the printout. 2 pts
3) Use the interest rate from the advertisement as the interest rate for your savings account. How much
money will you have in your account at the end of ten years? (Remember: your money is compounding
monthly for 10 years!) Show this calculation. 5 pts
4) How much interest will you earn at the end of ten years? Show this calculation. 5 pts
5) When comparing what you had before you put the money into the savings account to what you will
have at the end of ten years, what will the percent of increase be? Show this calculation. 5 pts
Since the money you earned from your personal loan is now tied up earning interest, you need to start saving
for the next purchase. But, you need to know how much to invest now in order to pay for it later, if later is in
one year.
Sofa (couch)
Coffee table
TV
Dresser (minimum 3 drawers)
Bed
6) How much is your next purchase? Pick one of the above items and find an advertisement or flyer that
shows the cost of your next purchase. You must include this printout in your project. Highlight the item
on the printout. 2 pts
7) How much money do you need for this next purchase? Use the present value formula to determine
how much money you need to invest in order to afford your next purchase in one year. You may
assume that you are investing in a CD that has an AMAZING rate of 12.3% and is compounded
quarterly. Show this calculation. 5 pts
Formula(s) needed:
Part IV – Think big: buying a car
(Section 11.4 – HW Problems: page 688, #9-12 using the internet)
DUE MARCH 28TH
List your salary _____________________
Identify your two disposable income amounts: __________________ _____________________ (2pts)
You need a car and cannot put it off any longer. You are hoping that you have enough money (disposable
income) to put a down-payment on a car. If you do, you will pay the remaining cost of the car with an
installment loan. Based on your disposable income amount, you must decide if you can afford to buy a car and
pay the monthly payments and for how many years your installment loan should be – 2, 3 or 4 years.
1) How much does the car cost? You will need to find an advertisement in the newspaper or online that
shows the full cost of your chosen car. Highlight the cost of your car on the printout. 2 pts
2) How much can you afford as a down-payment? The down-payment cannot be more than 10% of your
disposable income. What is 10% of your disposable income? Show this calculation. 5 pts
3) Now that you have determined your down-payment amount, what is the total amount that you will
need to finance? This is your installment loan amount. Show this calculation. 5 pts
4) Find an APR online for each term of your installment loan – 2, 3 or 4 years. This will give you the
monthly payments for the installment loans. You will need to submit a copy of APRs with your project.
Highlight the monthly payments on the printout. 2 pts
5) How much will each installment loan cost you for the whole year? Highlight the total cost for the 2, 3 or
4 year installment loan on the printout. 2 pts
6) Based on your disposable income, which installment loan can you afford for the year? Remember! You
made a personal loan – your total is now less than what you started with, so make sure to account for
that in your calculations. Show this calculation. 5 pts
Formula(s) needed:
Part V – Do you qualify for the Mortgage?
(Section 11.5 – HW Problems: page 702, #11-15,19ab,23)
DUE APRIL 2ND
List your salary _____________________
Identify money earned in savings account: __________________ (2pts)
At the beginning of the project you had to decide how your money would be allocated – mortgage or rent.
Whether you decided you were going to be a homebuyer or a renter at the beginning of the project, you are
now going to be a homeowner. Congratulations! Now is the time to see if you qualify for a mortgage, step by
step.
Step one: Pick a house, what’s the cost.
1) What is the cost of the house that you want to buy? Make sure to include a copy of the advertised sale
price in your project. Highlight the cost of the house on the printout. 2 pts
Step two: Down-payment.
2) Use the money you earned from the savings account in “Part III – Investment Time!” as your downpayment. You can use the money now, since time is of no consequence in this project. What is this
amount? 2 pts
3) Most mortgage companies are looking for 1st-time home-buyers to put down 20% of the cost of the
house. Does the amount from above qualify as 20% of the cost of the house? Whether it does or not,
you will be using this amount as your down payment. Show this calculation. 5 pts
Step three: How much is the mortgage?
4) Now that you have your down payment (which may or may not be 20% of the cost of the house), the
remaining amount will be covered by the mortgage, which is a loan. How much is the remaining
amount? Show this calculation. 5 pts
5) You need to find a 30-year fixed mortgage with an interest rate that you can afford, but you have no
control over interest rates. Find an advertised mortgage interest rate and calculate your monthly
payment. Make sure to include a copy of your advertised mortgage rate in your project. Highlight the
mortgage rate on the printout. 2 pts
Step four: Can you afford it?
6) Determine 28% of your adjusted monthly income. This is the maximum amount of your income that
you can expect to pay to cover the mortgage. How does this amount compare to your disposable
income amount? Show this calculation. 5 pts
7) Can you afford this mortgage? You must support this answer with facts. A “yes” or “no” answer will not
earn any points. 2 pts
8) Whether or not you can afford this mortgage, let’s think about how much money you will ultimately
spend on this house. Calculate the total amount of money you will pay at the end of the 30-year
mortgage plus the down payment. How much more than the original purchase price is this amount?
4 pts
Formula(s) needed:
Project Presentation – 11pts
DUE APRIL 2ND
On March 28th, we will be having presentations/discussions about the projects. Please keep a record of the
following information as you complete each part of the project so that you can participate in the presentation
discussions. You will need to hand in this sheet on presentation day.
Part I
1) Have you ever created a budget (of any kind) based on your income? If so, what are/were the
components of that budget? Were any components the same as what you had to calculate in Part I?
_______________________________________________________________________________
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2) After having completed your project budget breakdown, do you think that you will be more or less
likely to create a budget in the future? Why or why not?
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Part II
3) Have you ever loaned a friend or family member money? If so, did you charge them interest and how
much? If you were asked to loan money to a friend or family member and refused, why did you say no?
_______________________________________________________________________________
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4) Have you ever been the one who needed to borrow money from a friend or family member? If so, did
they charge you interest?
_______________________________________________________________________________
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5) What do you think would be the most awkward part about loaning money to a friend or family
member and how could you avoid it (without refusing the loan)?
_______________________________________________________________________________
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Part III
6) How do you save money? Do you have a savings account or do you save the old fashioned way of
putting your money in a sock (or a drawer, or a piggy bank, etc)?
_______________________________________________________________________________
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7) Have you ever saved money for a short (or long) period of time in order to pay for something? How
long did you save for – in terms of weeks or months?
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Part IV
8) If you are driving around in a car these days, do you own it, lease it, or are you just a “borrower”?
Whether you personally own or lease, or if you are just a “borrower”, how do you afford to pay for the
car and the expenses that come with it? Do you have a job to cover these expenses or does someone
take care of them for you?
_______________________________________________________________________________
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9) After having completed the research for part IV, would you be more likely to consider a car loan for a
shorter length of time or a longer length of time – 2 years vs. 4 years? Why or why not?
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Part V
10) Do you currently own, rent or “take up space” in a house or an apartment?
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11) After having completed part V, what is your reaction you when you compare the original purchase
amount (price of the house) to the mortgage-plus-down-payment amount?
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