FINANCIAL PLANNING PROBLEMS CHAPTER 8 by lht19038

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									FINANCIAL PLANNING PROBLEMS CHAPTER 8


1. You can purchase a service contract for all of your major appliances for $180 a year. If the
   appliances are expected to last for 10 years, and you earn 5 percent on your savings, what
   would be the future value of the amount you would pay for the service contract?


2. 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?


3. Tammy Monahan is considering the purchase of a home entertainment center. The product
   attributes and weights she plans to consider are:
    portability          .1
    sound projection     .6
    warranty             .3
    Tammy rated the brands as follows:
                           portability        sound projection       warranty
     Brand A                   6                     8                  7
     Brand B                   9                     6                  8
     Brand C                   5                     9                  6
    Using the Consumer Buying Matrix (p. 252), conduct a quantitative product evaluation rating
    for each brand. What other factors is Tammy likely to consider when making her purchase?


4. Calculate the unit price of each of the following items:
     Motor oil                ___ cents a quart
     Cereal                   ___ cents an ounce
     Canned fruit             ___ cents an ounce
     Facial tissue            ___ cents per 100
     Shampoo                  ___ cents an ounce


5. Based on the following, calculate the costs of buying and of leasing a motor vehicle.

               Purchase Costs                                       Leasing Costs
Down payment               $1,500                  Security deposit          $500
Loan payment       $450 for 48 months              Lease payment      $450 for 36 months
Estimated value at                                 End of lease charges      $600
End of loan               $4,000
Opportunity cost interest rate: 4 percent

								
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