BUSN 380 Problem Set 5

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

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            .1

sound projection

  .6

warranty

              .3

Tammy rated the brands as follows:

 

 portabilitysound projectionwarranty

687

968

596

Brand A

Brand B

Brand C

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