Allen Martin, a financial planner from Northridge, California, is remodeling his kitchen. Allen, who lives alone, has decided to replace his refrigerator with a new model that offers more conveniences. He has narrowed his choices to two models. The first is a basic 16-cubic-foot model with a bottom freezer for $1,699. The second is a 25.4-cubic-foot model with side freezer for $2,400. Additional features for this model include icemaker, textured enamel surface, and ice and water dispenser. Allen’s credit union will lend him the necessary funds for one year at a 12 percent APR on the installment plan. Following is his budget, which includes $3,345 in monthly take-home pay.
(a) What preshopping research might Allen do to select the best brand of refrigerator?
(b) Using the information in Table 7-1 on page 214 or the Garman/Forgue companion website, determine Allen’s monthly payment for the two models.
(c) Fit each of the two monthly payments into Allen’s budget.
(d) Advise Allen to help him make his decision.