What is the first step of problem solving?

 Prevention

Gathering information

Long-term remediation

Finding the root cause

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Which tool can you use when debugging to look at library calls made by the software?

- top

- strace

- tcpdump

- ltrace

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What is part of the final step when problem solving?

• - Documentation 
• - Long-term remediation 
• - Finding the root cause 
• - Gathering information

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1. Vocabulary - Making major purchase decisions

What Does It Mean?

Match the terms relating to the basic terminology and concepts associated with making automobile and housing decisions with the descriptions of the terms on the right. Read each description carefully and type the letter of the description in the Answer column next to the correct term.

These are not necessarily complete definitions, but there is only one possible answer for each term.

Term	Answer		Description
Rebate	D	A.	This is the price of an asset being leased as specified in the lease agreement, which includes the negotiated cost of the vehicle and any applicable fees and taxes.
Purchase option	G	B.	This is a contract and business transaction in which the user of an item, such as a car or house, receives the right to use it in exchange for scheduled payments for a fixed period of time.
Lease	B	C.	This type of lease arrangement is often called a walk-away lease, because it allows the lessee to merely return the vehicle provided that the preset mileage limit has not been exceeded and the vehicle hasn’t been abused.
Depreciation	J	D.	This is a partial refund offered to attract the buyer to purchase the vehicle.
Closed-end lease	C	E.	This refers to the practice of unethical car dealers quoting a low sales price on a vehicle to induce a potential customer to make an offer and then attempting to add costly add-ons to the transaction prior to the signing of the contract.
Sticker price	H	F.	This agreement, which is used to purchase a car, details the offering price and all conditions of the offer; when the buyer and seller sign it, it establishes the terms of the legally binding transaction.
Residual value	I	G.	This is the price at which a lessee can purchase his or her leased car or other asset of the end of the lease period.
Low-balling	E	H.	This is the advertised retail price listed on a particular vehicle for sale.
Capitalized cost	A	I.	This is the worth of the leased asset after the lease period expires.
Sales contract	F	J.	This phenomenon, which represents the loss in the value of an asset that occurs during the period of its ownership, is calculated as the difference between the asset’s purchase price and its subsequent sale price.

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12. The time value of money

Consider the following scenarios:

DelMonico Family

The DelMonicos have saved $5,000 towards their goal to have $45,000 for a down payment on a house in 6 years.

They will put the $5,000 in an account along with money they will deposit annually. They don’t know how much that annual deposit should be, so they’ve asked you to calculate it

They have found a savings institution that will pay 6% interest.

Decker Family

The Deckers have set a goal to have $45,000 for a down payment on a house in 6 years.

They have not saved anything so far.

They have asked you to calculate how much they will need to put away each year to achieve their $45,000 down-payment goal.

They have found a savings institution that will pay 6% interest.

Use the scenarios along with the following factor table data to answer each of the questions. Note that the complete Future Value and Future Value Annuity tables (as well as the Present Value and Present Value Annuity tables) are located in the appendix in your text.

Table of Future Value Factors:

	Interest Rate
Year	5%	6%	8%
1	1.050	1.060	1.080
2	1.102	1.120	1.166
3	1.158	1.190	1.260
4	1.216	1.260	1.360
5	1.276	1.340	1.469
6	1.340	1.420	1.587
8	1.477	1.590	1.851
10	1.629	1.790	2.159

Table of Future Value Annuity Factors:

	Interest Rate
Year	5%	6%	8%
1	1.000	1.000	1.000
2	2.050	2.060	2.080
3	3.152	3.180	3.246
4	4.310	4.380	4.506
5	5.526	5.630	5.867
6	6.802	6.970	7.336
8	9.549	9.890	10.637
10	12.578	13.180	14.487

What is the amount of money the DelMonicos will need to deposit annually (rounded to the nearest two decimal places) to achieve their down-payment goal?

$5,437.60

Points:

1 / 1

What is the amount of money the Deckers will need to deposit annually (rounded to the nearest two decimal places) to achieve their down-payment goal?

$6,456.24

To calculate the DelMonico annual deposit amount, you must first calculate the future value of the $5,000 they will be putting away now (at 6%). This is the amount their $5,000 will be worth in 6 years.

$5,000 x 1.420 = $7,100

This amount is subtracted from their down payment to determine the amount they still need to save to achieve their down-payment goal.

$45,000 – $7,100 = $37,900

This net amount is then divided by the future value of an annuity factor to determine the annual amount that must be added to their $5,000 to accumulate the funds that constitute their down-payment goal.

$37,900 / 6.970 = $5,437.59

The Decker calculation is simpler. Take their down-payment goal amount and divide it by the future value of an annuity factor.

$45,000 / 6.970 = $6,456.24

Note: The use of calculators or a spreadsheet application may result in a slightly different answer due to rounding.

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11. Future value of a single amount

The time value of money is a financial concept that focuses on the idea that a dollar today will be worth more in the future. There are two key time value concepts: present value and future value. Looking at future value, the concept is that an amount in hand today will grow if it earns a specific rate of interest over a given period of time. This growth in value occurs not just because of the rate of interest being earned each year but also because that earned interest compounds. In other words, the interest earned in year one is added to the principal in year two, and interest is earned on this new principal balance; this continues through the set period of time.

Work through the following scenario to understand future value and the concept of compounding interest.

You have an eccentric aunt who has promised to deposit $7,000 in a savings account in your name. She has stated that you will not have access to the money for four years but that the money will be earning 5% interest. At the designated future date, the principal and interest will be yours to purchase a new car.

First gather the relevant data by completing the following table.

Present Value:	$7,000
Period:	4
Rate of Interest:	5.0 %
Future Value Factor:	1.216

Points:

1 / 1

Next use the following table of future value factors or your financial calculator to calculate the future value of this money in four years.

Period	1%	2%	3%	4%	5%	6%	7%	8%
1	1.010	1.020	1.030	1.040	1.050	1.060	1.070	1.080
2	1.020	1.040	1.061	1.082	1.103	1.124	1.145	1.166
3	1.030	1.061	1.093	1.125	1.158	1.191	1.225	1.260
4	1.041	1.082	1.126	1.170	1.216	1.262	1.311	1.360
5	1.051	1.104	1.159	1.217	1.276	1.338	1.403	1.469
6	1.062	1.126	1.194	1.265	1.340	1.419	1.501	1.587
7	1.072	1.149	1.230	1.316	1.407	1.504	1.606	1.714

The account will have a balance of $8,512.00   in four years (rounded to two decimal places).

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Budget concepts

What is a budget?

A budget is a short-term   report that helps achieve financial goals. A cash budget is a valuable money management tool that helps you:

•	Maintain the necessary information to monitor and control your finances
•	Decide how to allocate your income to reach your financial goals
•	Implement a system of disciplined spending, as opposed to just existing from paycheck to paycheck
•	Reduce needless spending, so you can increase the funds allocated to savings and investments
•	Achieve your long-term financial goals Aspects of budgeting The following statements describe various aspects of budgeting. Indicate whether each statement is true or false. True or False: When estimating income, include amounts that you can control, like bonuses and rental income. True False True or False: When estimating expenses, developing an amount that one can live within is the best approach. False True True or False: To finalize the budget, compare projected income to projected expenses. When income equals or exceeds total expenses, it is considered a balanced budget. True False True or False: To remedy a short-term budget surplus, shift additional income to a month where a deficit exists. True False True or False: In situations where an annual budget deficit exists, cutting expenses from the budget is optimal. True False Budgeting Examples For each of the following scenarios, indicate whether the individual made a correct choice or an incorrect choice when preparing a budget. Correct Choice Incorrect Choice Nathan is a sales rep who, based on last year, averaged $2,200 of monthly commission before taxes. He should include this in his budget. Stella was just notified that her contribution to the company’s health plan is increasing by 3.5%. It’s a company expense, so Stella doesn’t include it in her budget. As Sam was reconciling his checkbook, he realized that he incurred $13.25 last month for ATM withdrawals. He looked back at the last six months and realized that he averaged the same amount each month. This is an unexpected expense and shouldn’t be listed in his budget. Every year the Wus buy a big item or take a trip with a single annual bonus Barb receives. They included this in their budget.

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