Case 4 The Johnsons Decide to Buy a Car

(a) Make suggestions about how the $120 might be integrated into the Johnsons’ budget (Table 3.3 on page 73)
without changing the amount left over at the end of each month. Harry and Belinda want to retain that extra money to help defray some of the added expenses of home ownership.

(b) Which sources of used cars should they consider? Why?

(c) Assume that the Johnsons have narrowed their choices to two cars. Both have air conditioning, AM-FM radio, and automatic transmission. The fi rst car is an eight-yearold Chevrolet with 102,000 miles; it is being sold for $3400 by a private individual. The car has a six-cylinder engine, and the seller has kept records of all repairs, tune-ups, and oil changes. It will need new tires in about six months. The second car is a nine-year-old, twodoor Ford with 116,000 miles, being sold by a used-car dealership. It has a four-cylinder engine. Harry contacted the previous owner and found that the car was given in trade on a new car about three months ago. The previous owner cited no major mechanical problems but simply wanted a bigger car. The dealer is off ering a written 30-day warranty on parts only. The asking price is $3200.
Which car would you advise the Johnsons to buy? Why?