The following is an excerpt from a conversation between Kate Fleming and Bob Den
ID: 2479900 • Letter: T
Question
The following is an excerpt from a conversation between Kate Fleming and Bob Dent. Kate is debating whether to buy a stereo system from Design Sound, a locally owned electronics store, or Big Sound Electronics, an online electronics company.
Kate: Bob, I don't know what to do about buying my new stereo.
Bob: What's the problem?
Kate: Well, I can buy locally at Design Sound for $580.00. However, Big Sound Electronics has the same system listed for $599.99.
Bob: So what's the big deal? Buy it from Design Sound.
Kate: It's not quite that simple. Big Sound said something about not having to pay sales tax, since I was out-of-state.
Bob: Yes, that's a good point. If you buy it at Design Sound, they'll charge you 8% sales tax.
Kate: But Big Sound Electronics charges $18.99 for shipping and handling. If I have them send it next-day air, it'll cost $24.99 for shipping and handling.
Bob: I guess it is a little confusing.
Kate: That's not all. Design Sound will give an additional 1% discount if I pay cash. Otherwise, they will let me use my Visa, or I can pay it off in three monthly installments.
Bob: Anything else???
Kate: Well . . . Big Sound says I have to charge it on my VISA. They don't accept checks.
Bob: I am not suprised. Many online stores don't accept checks.
Kate: I give up. Waht would you do?
1. Assuming that Big Sound Electronics doesn't charge sales tax on the sale to Kate, which company is offering the best buy?
2. What might be some considerations other than price that might influence Kate's decision on where to buy the stero system?
Explanation / Answer
As per above calculation Big Sound company offering the best buy.
2.
Considerations other than price that influence Kate's decision.
i) If Kate want immediate delivery of the sterio system, she would have to pay additional $6 for shipping and handling charge. In these case design sound would be better option for her.
ii) Kate will has two payment option if she purchase from design sound, Cash and Visa pay. If she will use visa for payment, she will have the option to pay in three installment.
Design Sound Big Sound Purchase Price 580 599.99 Sales Tax @ 8% 46.40 - shipping and handling 18.99 Total Cost 626.40 618.98 Discount @ 1% (6.264) - Net Cost 620.136 618.98Related Questions
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