Part I

The Iowa caucuses are perhaps the most important yet mysterious contest in American politics. It all began after the 1968 Democratic National Convention protest, the party decided that changes needed to be made when electing their Presidential nominee. Iowa, at the time had a very complex process of precinct, county, district, and state conventions, so they decided to gather together to hold one big caucus. Rather than going to polls and casting ballots, Iowans would go to a set location in each of the precincts to make their choice.

Now each precinct divides its delegate seats among the candidates in the caucus votes. Voters indicate their support for a candidate by standing in a designated area of the caucus site forming a preference group. The thing is, they even have a space for undecided voters. For about thirty minutes, the voters try to convince their fellow voters to support who they are voting for. Undecided voters are able to “visit” each preference group to get more information on their candidate.

After thirty minutes, the process is stopped, and the participants in each group are counted. For a candidate to receive any delegate from that precinct, they must have the support of participants required by the viability threshold, which is fifteen percent. When the voting is finally closed, the final head count is conducted, and based upon the number of votes, the precincts decides which delegates go to the county convention. This process continues for the district and state conventions until delegates are chosen to go to the Democratic National Convention. This process is far more complex for the Democratic Party than the Republican Party, because the Democrats cast secret ballots in their precincts and then count the votes.

Iowa plays a huge part in the Presidential elections because not only do they give a hint of who could possibly win the nomination at the conventions, but they also tend to narrow the playing field of the prospects. Iowans are proud in knowing that they are the first in the nation to start the process. They welcome the media circus and the constant visits by candidates who are campaigning. The media plays a huge part in voters’ decision. Given that it is the first of many votes, a lot of people are tuned in and ready to vote!

 Part 2

Part III

Marco Rubio is the winner of the Iowa Caucus is because he won the election using the Copeland and the Borda Count methods. He was also the Condorcet Candidate defeating Donald Trump, Ted Cruz and Jeb Bush in head-to-head matchups using the pairwise comparison. Despite the fact that Ted Cruz won the Instant Runoff Voting and Donald Trump won by plurality, Rubio displays higher support from the voters overall in the election. In the case of Donald Trump’s victory with Plurality, his support is only taking into account the first place votes whereas Rubio had the greatest majority of second place voters by a smashing 94%. In the case of Ted Cruz, the victor of the Instant Runoff Voting, despite Rubio’s high support as a second place candidate in the preference schedule, Rubio was instantly dismissed because he was only able to acquire six first place votes. Using the Instant Runoff Voting and the Plurality Method violates the fairness criterion more than the other two methods used which determine Rubio as the winner. Since both the Plurality and the Instant Runoff Voting methods only take into account first place voters on the preference schedule, they are not good voting methods and should be dismissed in the case of the Iowa Caucus.

Rubio is the clear candidate selected in the Iowa Caucus because the methods used in the elections he won take into account both the preference of the voters in regard to the other three candidates as well as the number of votes. Therefore, since both the Borda Count and the Copeland Method results in a victory for Rubio, where both show a higher favor for democracy, these methods should be given greater support as well as the candidate they indicate. Even though the Arrow’s Impossibility Theorem (IIA) states that no voting system meets every criterion in all cases, Rubio had the majority of victories within the election types used in the Iowa Caucus.

Math 1030    Project 2

                  Buying a House

Names Angela Fields,  Talli Treseder,  Ashlyn Pettit,  Nury Jongejan

Select a house from a real estate booklet, newspaper, or website.  Find something reasonable – between $100,000 and $350,000.  Cut out the picture and/or description of your chosen house and attach it to this project.  Assume that you will pay the asking price for your house.

The listed selling price is $244,900.00.

Assume that you will make a down payment of 20%.

The down payment is $48,980.00.                        The amount of the mortgage is $195,920.00.

Ask at least two lending institutions for the interest rate for both a 15-year and a 30-year fixed rate mortgage with no “points” or other variations on the interest rate for the loan. 

Name of first lending institution: Mountain America Credit Union.

Rate for 15-year mortgage: 2.75%.                      Rate for 30-year mortgage 3.5%.

Name of second lending institution: Trillion Mortgage.

Rate for 15-year mortgage: 2.75%.                      Rate for 30-year mortgage 3.25%.

Assuming that the rates are the only difference between the different lending institutions, find the monthly payment at the better interest rate for each type of mortgage.

15-year monthly payment: $1,329.56.                  30-year monthly payment $852.66.

These payments cover only the interest and the principal on the loan.  They do not cover the insurance or taxes.

To organize the information for the amortization of the loan, construct a schedule that keeps track of: (1) the payment number and/or (2) the month and year (3) the amount of the payment, (4) the amount of interest paid, (5) the amount of principal paid, and (6) the remaining balance.  There are many programs online available for this.  A Microsoft Excel worksheet that does this available online at  http://office.microsoft.com/en-us/templates/loan-amortization-schedule-TC001019777.aspx?CategoryID=CT062100751033.  It’s not necessary to show all of the payments.  Fill in the sample of payments in the following schedules, and answer the questions after each table.

15-year mortgage

            Use the proper word or phrase to fill in the blanks.

The total principal paid is the same as the original amount of the loan.

The total amount paid is the number of payments times the schedule payment amount.

The total interest paid is the total amount paid minus the principal.

Use the proper number to fill in the blanks and cross out the improper word in the parenthesis.

Payment number one is the first one in which the principal paid is greater than the interest paid.

The total amount of interest is $ 152,520.01 (less) than the mortgage.

The total amount of interest is approximately 78% (less) than the mortgage.

The total amount of interest is approximately 22% (less) of the mortgage.

30-year mortgage

Payment number 105 is the first one in which the principal paid is greater than the interest paid.

The total amount of interest is $ 84,883.76 (less) than the mortgage.

The total amount of interest is approximately 43% (less) than the mortgage.

The total amount of interest is approximately 57% (less) of the mortgage.

            Suppose you paid an additional $100 a month towards the principal:

The total amount of interest paid with the $100 monthly extra payment would be $ 90,846.69.

The total amount of interest paid with the $100 monthly extra payment would be $ 20,189.55 (less) than the interest paid for the scheduled payments only.

The total amount of interest paid with the $100 monthly extra payment would be approximately 18.2% (less) than the interest paid for the scheduled payments only.

The $100 monthly extra payment would pay off the mortgage in 25 years and 2 months; that’s 58 months sooner than paying only the scheduled payments.

Observations and Reflections: 

Summarize what you have done and learned on this project. 

        There are many things to consider when buying a house such as location, property value, interest rates, credit score, and a realistic budget. Working on this project demonstrated the power that interest has over time. It also shows how critical it is to take time and analyze as many options as possible because they could have a big impact on the total amount that is paid for the loan. For example, when getting a 30-year loan vs. a 15-year loan the difference in interest is substantial. In the plan, above, the difference was almost $70,000 and even though each case is different, this example showed the amount of money you could potentially save if you choose the 15-year loan. Since it is critical to consider your budget, a 15-year loan option may not be realistic for due to the increased monthly payment.  However, there are ways to avoid paying all the scheduled interest by adding extra money to your monthly payments on any loan, which reduces the principal.

Compare

1.- The 15-year mortgage payment to the 30-year mortgage payment.

The monthly payment for the 15-year loan for a $195,920.00 mortgage is $1,329.56.  In contrast, the monthly payment is $852.66 for a 30-year loan and the difference is $476.90 per month. Although the 15-year loan payment is $476.90 higher per month that the 30-year loan payment, the loan will be paid off 15 years sooner.

2.- The 15-year mortgage interest to the 30-year mortgage interest.

The total interest paid   for the 15-year mortgage will be $67,636.25 less than the 30-year loan. The 15-year loan is a better option if you are able to afford the higher monthly payment, which must be taken into consideration when assessing your budget

3.- The 15-year mortgage to the 30-year mortgage with an extra payment.

When considering these two options, if a monthly payment of $1,329.56 for the 15-year loan isn’t possible, you can choose the 30-year option and increase your monthly payment by $100 per month, making the monthly payment $952.66.  This extra $100 a month payment will create a savings of $20,549.55 in interest over the life of the loan. You will also pay off the loan four years and ten months sooner than if you didn’t make the $100 extra payment.

4.- The 15-year mortgage to the 30-year mortgage with a large enough extra payment to save 15 years and have the loan paid off in 15 years.  Also, you know that the numbers don’t explain everything.  Comment on other factors that must be considered with the numbers when making a mortgage.

If you take the current interest rate of the 30-year loan at 3.25%, you would have to increase your payment by $525 per month to pay off the loan in 15 years. The total interest paid would be $51,829.43 with the increased monthly payments, which still exceeds the total interest paid for the 15-year loan by $8,429.44. Other things to consider, not included in the monthly payment figures shown here, when deciding whether or not a mortgage loan is the best option are, property tax rates, home insurance, the amount of down payment made and the borrower’s credit score, which may increase the amount of the monthly payments.

In transit and will be uploaded soon, but also not essential for assignment submission.

Direct Link to Math 1030 Reflection page.