# 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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