Download Chapter8HomeworkFCS1200Fall2011

Chapter 8 Homework for FINAN 1200 Fall 2011
1. If a person saves $63 a month by using coupons and doing comparison shopping, (a) what is the
amount for a year? (b) What would be the future value of this annual amount over 10 years, assuming an
interest rate of 4 percent?
2. Tammy Monahan is considering the purchase of a home entertainment center. The product attributes
she plans to consider and the weights she gives to them are as follows:
Portability .1
Sound projection .6
Warranty .3
Tammy related the brands as follows:
Brand A
Brand B
Brand C
portability
6
9
5
sound projection
8
6
9
warranty
7
8
6
Using the consumer buying matrix, conduct a quantitative product evaluation rating for each brand. What
other factors is Tammy likely to consider when making her purchase?
3. John Walters is comparing the cost of credit to the cash price of an item. If John makes a $80 down
payment and pays $34 a month for 24 months, how much more will that amount be than the cash price of
$695?
4. Calculate the unit price of each of the following items:
5. What would be the net present value of a microwave oven that costs $159 and will save you $68 a year
in time and food away from home? Assume an average return on your savings of 4 percent for five years.
6. Based on the following, calculate the costs of buying and of leasing a motor vehicle.
Purchase Costs
Down payment
$1,500
Loan payment
$450 for 48
months
Estimated value at
End of loan
$4,000
Opportunity cost interest rate: 4 percent
Leasing Costs
Security deposit
$500
Lease payment
$450 for 36
months
End of lease charges
$600