Personal Financial Planning: Complete Problem Sets 5, 6, and 7. Provide thesolutions under each corresponding problem.

Problem Set 5 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: Brand A Brand B Brand C portability 6 9 5 sound projection 8 6 9 warranty 7 8 6 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 Down payment $1,500 Loan payment $450 for 48 months Estimated value at End of loan $4,000 Opportunity cost interest rate: 4 percent Leasing Costs Security deposit $500 Lease payment $450 for 36 months End of lease charges $600 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? Problem Set 6 1. For each of the following situations, what amount would the insurance company pay? a. Wind damage of $835; the insured has $500 deductible. b. Theft of a stereo system worth $1,300; the insured has a $250 deductible. c. Vandalism that does $425 of damage to a home; the insured has a $500 deductible. 2. Beverly and Kyle Nelson currently insure their cars with separate companies paying $650 and $575 a year. If they insure both cars with the same company, they would save 10 percent on the annual premiums. What would be the future value of the annual savings over ten years based on an annual interest rate of 6 percent? 3. As of 2008, per capita spending on health care in the United States was about $8,000. If this amount increased by 5 percent a year, what would be the amount of per capital spending for health care in 10 years? 4. Sarah's comprehensive major medical health insurance plan at work has a deductible of $750. The policy pays 85 percent of any amount above the deductible. While on a hiking trip, she contracted a rare bacterial disease. Her medical costs for treatment, including medicines, tests, and a six-day hospital stay, totaled $8,893. A friend told her that she would have paid less if she had a policy with a stop-loss feature that capped her out-of-pocket expenses at $3,000. Was her friend correct? Show your computations. Then determine which policy would have cost Sarah less and by how much. 5. The Kelleher family has health insurance coverage that pays 80 percent of out-ofhospital expenses after a $500 deductible per person. If one family member has doctor and prescription medication expenses of $1,100, what amount would the insurance company pay? 6. You are the wage earner in a \"typical family,\" with $40,000 gross annual income. Use the easy method to determine how much life insurance you should carry. Problem Set 7 1. Calculating Net Asset Value. Given the information below, calculate the net asset value for the Boston Equity mutual fund. Total assets Total liabilities Total number of shares $225,000,000 5,000,000 4,400,000 2. Calculating the Rate of Return of Investment Using Financial Leverage. Suppose Shaan invested just $10,000 of his own money and had a $90,000 mortgage with an interest rate of 8.5 percent. If after three years he sold the property for $120,000. a. What is his gross profit? b. What is his net profit/loss? c. What is the rate of return on investment? 3. Shelly's assets include money in the checking and savings accounts, investments in stocks and mutual funds, personal property, such as furniture, appliances, an automobile, coin collection and jewelry. Shelly calculates that her total assets are $108,800. Her current unpaid bills, including an auto loan, credit card balances, and taxes total $16,300. Calculate Shelly's net worth. 4. Barry and his wife Mary have accumulated over $4 million during their 45 years of marriage. They have three children and five grandchildren. A- How much money can Barry and Mary gift to their children in 2008 without any gift tax liability? B- How much money can Barry and Mary gift to their grandchildren? C- What is the total amount of estate removed from Barry and Mary's estate? 5. Dave bought a rental property for $200,000 cash. One year later, he sold it for $240,000. A- What was the return on his $200,000 investment? B- Suppose Dave invested only $20,000 of his own money and borrowed $180,000 (interest free from his rich father). What was his return on investment