Problem set 5 | Business & Finance homework help

Problem Set 5

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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:



sound projection


Brand A




Brand B




Brand C




Using the Consumer Buying Matrix presented in Chapter 8, 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?