Mary Coyle has applied to you, the assistant manager at her bank branch for a 3-year loan in which to purchase a car. She wants $18,000 loan at the current rate of 1% per month (12% per annum). She and her husband, Doyle, have four children, aged 6-13, with the youngest starting first grade in September. Doyle earns $43,000 a year as an accountant for the Shiny Foil Company. He is working on his CPA designation and expects to pass those exams next year. Mary wants a car so she can start working outside the home again, after being out of the labor force for 10 years. She can work as a commissioned salesperson for a small food processor, Meaty Broil, Inc. Mary has worked in the food industry before and feels she can be successful. Currently, salespeople make about $35,000-$40,000 annually, but must pay work expenses, such as automobile costs, themselves. The earnings don?t come early on; but, after months of experience or years of building up a client list. Mary can?t work full-time for a couple of years, since she wants to be at home when the kids aren?t in school. So, she plans to work about 5 hours daily outside the house but do some of the paperwork and phone calling at home. Mary and Doyle own their small home. It has monthly mortgage payments of $748. The mortgage will be paid off in 25 years. Property taxes amount to $1,200 annually. Their other car has two years of $275 monthly payments remaining. Doyle?s take-home pay is $32,000. They have $10,000 in an IRA for Doyle and have $1,000 in savings for emergencies. In addition, Mary has $3,000 that she will use for a down payment on the car. 1. What advice would you give Mary, either as a banker or as a financial planner? 2. Would you approve the loan application? Why or why not? Show how you came to this conclusion.
Paper#13645 | Written in 18-Jul-2015Price : $25