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Team #2

Group Members: Jonathan Green Natalie Garduno Ahmed El Baily. Team #2. Southern California vs. Massachusetts. Scenario. Phil, a recent finance graduate from MIT is planning to save as much as possible within the next five years for a down payment on a house.

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Team #2

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  1. Group Members: Jonathan Green Natalie Garduno Ahmed El Baily Team #2

  2. Southern California vs. Massachusetts

  3. Scenario Phil, a recent finance graduate from MIT is planning to save as much as possible within the next five years for a down payment on a house. For the period he will be saving, Phil must decide on whether to continue to live in Cambridge, Massachusetts or move back to Chino Hills, California where his family resides. Phil will be working as a financial analyst at the Federal Reserve in Los Angeles, California or at Liberty Mutual in Boston Massachusetts. Where can Phil save the most money in five years, Southern California or Massachusetts?

  4. Considerations The factors that will affect how much Phil can save include:

  5. Initial Findings • Economically Los Angeles is the more attractive choice. • Los Angeles has a much higher transportation cost. • Boston has a much higher utility cost. • The variables that affected the result the most were local taxes and starting salary . • Other variables (eg. Federal income tax) are location independent, thus marginally affecting results.

  6. Sensitivity Analysis

  7. Sensitivity Analysis

  8. Sensitivity Analysis

  9. Decision • Living in either place has similar economic value. • Most of the variables required such drastic changes for their to be a clear choice, that they are unlikely to occur. • Presently, it is more advisable for Phil to live in Los Angeles until the price of gasoline increases to $3.73 per gallon. • In either case, Phil would have more than adequate funding to purchase a house.

  10. Resources • www.census.gov • www.whitefenceindex.com • www.taxfoundation.org • www.salary.com • www.cityratings.com • Bureau of Labor and Statistics • http://www.bls.gov/oes/current/oes_nat.htm • This website presents national occupational employment and wage estimates. It is a useful website to use when deciding exactly which occupation to pursue and in which state, and when looking into and calculating retirement. • Spearling’s Best Places • www.bestplaces.net • This website provides a cost of living calculator, by presenting a side-by-side comparison of two locations and portraying all major costs such as food, taxes, utilities, etc. It is a very useful website when conducting any type of personal economic analysis.

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