 # YOU CAN DO THE MATH

## Overcome Your Math Phobia and Make Better Financial Decisions

### Chapter List of Forms

1. Saving for a College Education
• Lump Sum Deposit Account -- Final Value
• Simple Annual Interest Compute value of an account into which D dollars has been deposited at a simple annual interest rate r for n years.
• Daily Compounded Interest Compute value of an account into which D dollars has been deposited at a daily compounded interest rate r for n years.
• Lump Sum Account -- Target Value
• Simple Annual Interest Compute amount that must be deposited into an account in order to accumulate V dollars in n years at a simple annual interest rate r.
• Daily Compounded Interest Compute amount that must be deposited into an account in order to accumulate V dollars in n years at an interest rate r, compounded daily.
2. Investing for a College Education
3. Taking into Consideration Taxes and Inflation
• Inflating Prices Compute the price of an item whose initial price P0 is subject to an inflation rate of r for n years.
• After-Tax Rate of return Compute the after-tax rate of return when the stated return rate is r (in decimal form) and the income tax bracket is b (in percent)
• Effect of Taxes on a Simple Annual Interest Account Compute the tax-reduced value of an account into which D dollars has been deposited, at a simple annual interest rate r, for n years, subject to a marginal tax bracket b.
4. Tax-Deferred Accounts Can Help
• Taxable versus Tax-Deferred; Simplest Model Compute and compare the values in two accounts: in the second, a regular annual deposit is made, the interest minus the tax due remains and accumulates in the account; in the first, a regular annual deposit is made and the tax-deferred interest remains to accumulate in the account. In both accounts, D is the amount deposited, r is the interest rate, n is the number of years, and in the second account b is the marginal tax rate, leading to an effective interest rate of rb as in item 3 above. .
• Taxable versus Tax-Deferred; Complex Model Compute and compare the values in two accounts: in both accounts, D is the annual amount of money available; however, in the second account, taxes are paid on it before investment, and taxes are paid on the interest; whereas in the first account, taxes are paid on both the principal and interest at the end of the investment period. As usual, r is the interest rate, n is the number of years, and b is the marginal tax rate.
5. Your First Job: What is Your Salary Worth
• Freedom Quotient Compute the freedom quotient, that is, the quotient of your after-tax income divided by your gross income.
6. Buying a House or Car: Mortgages and Loans
• Loan Payment Compute the monthly payment P on a loan of B dollars, at an interest rate r for n months.
• Loan Amount Compute the amount B of a loan that a monthly payment P will support, if the interest rate is r, and the loan period is n months.
• Magic Number Compute the magic number on a loan with interest rate r and loan period of n months.
• Total Payments Compute the total payments on a loan of B dollars, at an interest rate r for n months.
• Total Interest Compute the total interest paid on a loan of B dollars, at an interest rate r for n months.
7. Buying or Leasing Your Car
• Lease Payment Compute the monthly lease payment on a standard car lease, where the cap cost is C, the residual value is R, the money factor is M, and the number of months is n.
8. Owning or Renting Your Home
No forms for this chapter; Click here if you need an arithmetic calculator.
9. Insurance
No forms for this chapter; Click here if you need an arithmetic calculator.
10. Cut up those #\$%^& Credit Cards
• Credit Card Interest Compute the monthly interest charge on a balance of B dollars if your credit card company charges an annual interest rate r.
11. Gambling: Can I Win the Lottery
No forms for this chapter; Click here if you need an arithmetic calculator.
12. The Stock Market and Other Investments
• Escalating Investment Program Compute the balance in an investment account into which D dollars is invested in the first year, the account has a return rate of r, and the amount invested annually is escalated at the rate s.
• Magic Number for an Escalating Investment Account. Compute the magic number for an escalating investment account whose return rate is r and escalation rate (of investment) is s.
13. Retirement
• Discounting inflation
• How Long Will Your Money Last Compute how many years your nest egg will last if you have an annual shortfall of S dollars, your nest egg is E dollars, and your return rate is r.
• How Much You can Spend Compute how much you can spend annually from a nest egg of size E, returning interest at a rate r, if you expect it to last n years.
• Accounting for inflation
• How Long Will Your Money Last Compute how many years your nest egg will last if you have an annual shortfall of S dollars, your nest egg is E dollars, your return rate is r, and the rate of inflation is s
• How Much You can Spend Compute how much you can spend annually from a nest egg of size E, returning interest at a rate r, subject to an inflation rate s, if you expect it to last n years.