Personal Finance Ch 6 HW
A class-action suit against a utility company resulted in a settlement of $1.4 million for 62,000 customers. If the legal fees, which must be paid from the settlement, are $300,000, what amount will each plaintiff receive? (Round your answer to 2 decimal places.)
Amount per plaintiff= (Settlement amount - Legal fees) / Number of plaintiffs = ($1,400,000 - $300,000) / 62,000 = $17.74
John Walters is comparing the cost of credit to the cash price of an item. If John makes a down payment of $125 and pays $35 a month for 24 months, how much more will that amount be than the cash price of $711?
Cost of credit = Down payment + (Payment amount × Number of payments) − Cash price = $125 + ($35 × 24) − $711 = $254
A service contract for a video projection system costs $70 a year. You expect to use the system for five years. Instead of buying the service contract, what would be the future value of these annual amounts after five years if you earn 3 percent on your savings? Use Exhibit 1-B. (Round FVA factor to 3 decimal places and final answer to 2 decimal places.)
FV=Annual cost × Future value annuity factor = $70 × 5.309 = $371.63
Use the following data: Down payment (to finance vehicle) $4,000 Monthly loan payment $560 Length of loan 48 months Value of vehicle at end of loan $7,200 Down payment for lease $1,200 Monthly lease payment $440 Length of lease 48 months End-of-lease charges $600 a. What is the total cash outflow for buying and for leasing a motor vehicle with a cash price of $24,000? b. Based on your answers in part a, would you recommend buying or leasing?
a. Buying: Total cash outflow=Down payment + (Loan payment × Number of payments) - Ending vehicle value =$4,000 + ($560 × 48) - $7,200 =$23,680 Leasing: Total cash outflow=Down payment + (Lease payment × Number of payments) + End-of-lease charges =$1,200 + ($440 × 48) + $600 =$22,920 b. You should choose the option with the lower total cash outflow, which in this case is leasing.
Use the following data: Down payment (to finance vehicle) $6,400 Monthly loan payment $900 Length of loan 48 months Value of vehicle at end of loan $12,000 Down payment for lease $2,400 Monthly lease payment $680 Length of lease 48 months End-of-lease charges $1,200 a. What is the total cash outflow for buying and for leasing a motor vehicle with a cash price of $37,800? b. Based on your answers in part a, would you recommend buying or leasing?
a. Buying: Total cash outflow=Down payment + (Loan payment × Number of payments) − Ending vehicle value =$6,400 + ($900 × 48) − $12,000 = $37,600 Leasing: Total cash outflow=Down payment + (Lease payment × Number of payments) + End-of-lease charges =$2,400 + ($680 × 48) + $1,200 = $36,240 b. You should choose the option with the lower total cash outflow, which in this case is leasing.
