Assignment 1 - John's Home Purchase - Group F.docx -...

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Assignment 1: Modeling and Spreadsheet Engineering Group Member Names: Lemae Basalo Frances Jamey Ibasco Divine Uwihaye Modeling Introduction In data modeling, it is important to first organize the data (numbers) and information available into the following categories: 1. Assumptions : Facts that will be held constant that will simplify a data model. This will typically be facts that tend to change over time. For example, trying to predict future interest rates is difficult, so assume inflation to be at 2% into the future). Assumptions will either be a parameter or part of the goal . 2. Parameters : The inputs that will be used in the spreadsheet calculations. a. Variable Parameters: Facts that can be changed and adjusted to meet a goal. These are facts and values that can be influenced. For example, spending habits can be adjusted if budgets cannot be initially met. b. Assumptions Parameters: Facts that will not be adjusted, they are bound by the assumptions stated. 3. Goal: The outputs that will be calculated from the parameters. May include non-numerical facts that are important to note. 4. Irrelevant : Facts that have no value to the problem we are trying to solve After the data is categorized, a problem statement can be formulated (i.e. what are we trying to solve). The problem statement should also state any key assumptions. Deliverables John is saving for a house and is planning to make a purchase after saving for an additional two years from today . He currently has a planned budget, an idea of the purchase price of a house, and savings for a down payment and would like to consult you to ensure his expectations are realistic. The statements below outline John’s current financial situation. 1. Classify the following facts into Irrelevant , Assumption: Goal , Assumption Parameter , Variable Parameter , and Goal. Explain your choice in the justification section. Statement Classification Justification John currently has $20,000 in savings This amount is John’s current savings. It cannot be adjusted. Current mortgage interest rate is 3.00% For analysis, the current mortgage interest rate will be held constant as this may change invariably. This rate may not greatly affect John while he is saving up
but has a significant impact after he purchases it as his installment payments are applied first to interest before principal home loan. John works in Marketing John could work in some other lucrative field as a part-time or he could perform well at his current job to receive a raise Current unemployment rate is 6% This does not directly affect his decision of purchasing a house since he currently has a safe employment. John’s budget for buying a house is $400,000 This is the target purchase price of the house that John wants to purchase. John currently rents for $1500 a month If lessor agrees, John can look for someone as additional occupant of the apartment/house he is currently renting to cut down on rent expense.

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