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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