group members: david baldonado christian kouttjie henry phung rafael ruiz
DESCRIPTION
Options Two job offers are available In Los Angeles, CA: $70,000 /year salary, with a raise of 3% every 2 years In Knoxville, TN: $50,000 /year salary, with a raise of 3% every yearTRANSCRIPT
Group members:David BaldonadoChristian Kouttjie
Henry PhungRafael Ruiz
Scenario Southern California vs. Tennessee
Octavio and his dog, Rex, are saving up $200,000 for a down payment on a house back home in California.
Housing ~ 850sq ft apartment that accepts dogs Where should he live?
Options Two job offers are available
In Los Angeles, CA: $70,000 /year salary, with a raise of 3% every 2 years
In Knoxville, TN: $50,000 /year salary, with a raise of 3% every year
Considerations Equivalent Distance Commuting Cost –
LA: $2.26/gal for 20 miles roundtripTN: $1.82/gal for 20 miles roundtrip
Healthcare Costs– LA: $4,156/yearTN: $4,274/year
Dog Cost - $1,525/year Rent -$1200 LA and $540 Knoxville State Income Tax – 9.3% CA and 0% TN
Considerations Food and Entertainment:
$3600 per year Car payment (lease): $300/mo
25 MPG Car insurance:
LA: $842/yrTN: $659/yr
Decision Which location will let Octavio reach his
savings goal the fastest?Without Sensitivity AnalysisWith Sensitivity Analysis
Without Sensitivity Analysis Tennessee is the obvious choice given
the considerations Knoxville: Goal is reached in 9 years
with $4700 leftover Los Angeles: Goal is reached in 12
years with $1500 leftover
With Sensitivity Analysis What does it take to make Los Angeles
more financially desirable? Factors to consider
RaisesSavings APRInflationAffordable Apartment in each cityAffordable car in each cityStarting Salary
Starting Income
Car Lease Payments
BMW 328i
BMW ///3 (M3)
Conclusions It depends… Personally, we would stay in L.A. Sacrifices can be made If you do not mind living in Knoxville,
then you can either lease an M3 or you can stay in a MUCH more luxurious apartment.
Your choice!
Resources www.google.com http://www.sniksnak.com/ac/costs.html - Dog Annual Cost http://swz.salary.com/costoflivingwizard/layoutscripts/
coll_result.asp?presentsalary=70000&presenthomemetrocode=98&presentworkmetrocode=98&newhomemetrocode=84&newworkmetrocode=84&x=56&y=6 – Cost of Living Estimates and Salary Comparison and State Income Tax
Rent.com – Apartment Information Ncsl.org – Annual Health Care Cost Losangelesgasprices.com – Gas Prices…in Los Angeles, CA Knoxvillegasprices.com – Gas Prices…in Knoxville, TN Iii.org – Car Insurance