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Problem Set 5

1. 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:

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? -

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

Purchase Costs Leasing Costs


Down payment Loan payment

$1,500 Security deposit $450 for 48 months Lease payment

$500 $450 for 36 months

Estimated value at End of loan

$4,000 End of lease charges

$600

Opportunity cost interest rate: 4 percent

3. 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? 4. You estimate that you can save $3,800 by selling your own home rather than using a real estate agent. What would be the future value of that amount if invested for five years at 7 percent?

5. John Walters is comparing the cost of credit to the cash price of an item. If John makes a $60 down payment, and pays $34 a month for 24 months, how much more would that be than the cash price of $695?

Busn 380 week 5 problem set 5  
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