1. Group members: David Baldonado Christian Kouttjie Henry Phung Rafael Ruiz

2. 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?

3. 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

4. Considerations  Equivalent Distance Commuting Cost – LA: $2.26/gal for 20 miles roundtrip TN: $1.82/gal for 20 miles roundtrip  Healthcare Costs– LA: $4,156/year TN: $4,274/year  Dog Cost - $1,525/year  Rent -$1200 LA and $540 Knoxville  State Income Tax – 9.3% CA and 0% TN

5. Considerations  Food and Entertainment: $3600 per year  Car payment (lease): $300/mo 25 MPG  Car insurance: LA: $842/yr TN: $659/yr

6. Decision  Which location will let Octavio reach his savings goal the fastest? Without Sensitivity Analysis With Sensitivity Analysis

7. 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

8. With Sensitivity Analysis  What does it take to make Los Angeles more financially desirable?  Factors to consider Raises Savings APR Inflation Affordable Apartment in each city Affordable car in each city Starting Salary

9. Starting Income

10. Car Lease Payments BMW 328i BMW /// 3 (M3)

11. 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!

12. Resources  www.google.com  http://www.sniksnak.com/ac/costs.html - Dog Annual Cost  http://swz.salary.com/costoflivingwizard/layoutscripts/coll_res ult.asp?presentsalary=70000&presenthomemetrocode=98&p resentworkmetrocode=98&newhomemetrocode=84&newwor kmetrocode=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