Activity 5.4.docx

# Activity 5.4.docx - Answer the following 1 Calculating...

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Answer the following: 1. Calculating Future Value. 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 will pay for the service contract? 180 ( 1 + . 05 ) 10 1 .05 Future value of a series of payments = 2,264.02 or an average of \$226.40 per year 2. Calculating the Cost of Credit. John Walters is comparing the cost of credit to the cash price of an item. If John makes an \$80 down payment and pays \$34 a month for 24 months, how much more will that amount be than the cash price of \$695? 80 + 34(24)= \$896 896 – 695 = \$201 more than cash purchase 3. Computing Unit Prices. Calculate the unit price of each of the following items: Item Price Size Unit Price Motor oil \$1.95 2.5 quarts 78 cents/quart (1.95/2.5) Cereal 2.17 15 ounces 14.46 cents/ounce (2.17/15) Canned fruit 0.89 13 ounces 6.85 cents/ounce (.89/ 13) Facial tissue 2.25 300 tissues 75 cents/100 tissues (2.25/3) Shampoo 3.96 17 ounces 23.29 cents/ounce (3.96/17) 4. Comparing Automobile Purchases. Based on financial and opportunity costs, which of

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