Long Term Purchases Answers

Kevin is looking at two brands of washing machines. Between water and electricity, a Brand C washer uses about $0.65 per load, and a Brand D washer uses about $0.27 per load. Kevin averages about five loads of laundry per month. After one year, how much more would the utility costs for a Brand C washer be than the utility costs for a Brand D washer?

Nicole used her credit card to buy a $1,255 mattress. Her credit card has an APR of 11.56%, compounded monthly, and the mattress was the only purchase on the card. Nicole paid off the mattress after two and a half years. If the sales tax in Nicole’s area is 9.08%, how much interest did Nicole pay in total? (Round all dollar values to the nearest cent.)

Ellen purchased a dishwasher, which cost $315 before the 9.22% sales tax. She used the machine an average of 10 times per week for the next six years, at which point she replaced it. Each time she ran the dishwasher it cost her $0.09 for water and $0.13 for electricity. What was the lifetime cost of Ellen's dishwasher?

Of the following, which statement or statements accurately reflect a way in which credit can be safer than cash?I. If your credit card gets stolen, you can cancel it and get your money back.II. It is harder to lose a single credit card than a large number of bills.III. If a merchant does not honor the agreement, you can call the credit company and dispute the charges.

From the statements below, identify the way or ways in which making only minimum monthly payments on a long-term credit purchase can be a disadvantage.I. It is illegal to make only the minimum payments for more than one year.II. Repeatedly making minimum payments harms your credit score.III. The total cost is higher if the length of the debt is longer.

Of the following, which statement or statements accurately represent possible effects of a long-term credit purchase on your credit score?I. Showing a willingness to pay high interest rates increases your score.II. Making only minimum payments for an extended time can hurt your score.III. Regularly paying off a credit balance can boost your score.

You are considering buying one of two brands of barbecue grills. Brand F costs $650 and will last for about fifteen years. Brand G costs $200 and will last for about five years, so you will need to buy three of them over the years to equal one Brand F grill. In either case, you plan to pay for the grill with your credit card, which has an interest rate of 13.01%, compounded monthly. You will pay off a Brand F grill in five years of monthly payments, and you will pay off a Brand G grill in three years of monthly payments. Assuming that you have no other purchases on your credit card, over a fifteen-year period, which kind of grill will be cheaper, and how much cheaper will it be? (Round all dollar values to the nearest cent.)

Carlos bought a $235 water heater with his credit card. He used the water heater for five years before replacing it. He paid off the water heater after two years, making monthly payments. The water heater cost him an average of $1.56 per week in electricity, and $0.78 per week in water. If Carlos’s credit card has an APR of 14.15%, compounded monthly, and he made no other purchases with it, what percentage of the lifetime cost of the water heater was interest? (Round all dollar values to the nearest cent.)

Choose the most appropriate action for making a large purchase.

Jenny used her credit card to buy a refrigerator with a base cost of $824. The refrigerator consumed an average of $0.09 in electricity every day. Jenny made regular monthly payments for three and a half years, at which point the refrigerator was paid off. Over the eight years that Jenny had the refrigerator, it needed repairs three times, costing $68.75 each time. If Jenny’s credit card has an APR of 10.54%, compounded monthly, and sales tax in Jenny’s area is 7.13%, what was the lifetime cost of Jenny’s refrigerator? Assume that Jenny made no other purchases with her credit card, and round all dollar values to the nearest cent. (Remember that leap year occurs every four years.)