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:
sound projection .6
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