Question

Develop and write the complete Price Equation for an Apple iPad.

Students identify the costs, discounts, fees/charges, etc. for each item listed to complete the Price Equation for an Apple iPad Air. Here are some of the accessories and options available:

   a.   List Prices—Apple Online Store: (NOTE: APPLE’S PRICES MAY CHANGE TO NEW PRICES WITHOUT NOTICE.)

             –   Apple iPad Air Finish/Model: Black/Space Gray, 128GB, Wi-Fi + Cellular; MSRP is $929.00.

             –   Network Carrier—Verizon: Assume you’re a heavy data user (video downloads, Internet browsing, e-mail, etc.). The cost for a 10GB data plan is $70.00 per month ($10 line access+ $60 account access) or $840.00 per year.

             –   iPad Air Smart Case—Black Leather: To protect the iPad Air, select this accessory. The MSRP of the mount is $79.00.

             –   iPad Camera Connection Kit: Allows one to import video and photos from a camera to the iPad. Its MSRP is $29.00.

             –   Apple Wireless Keyboard: The MSRP for this keyboard is $69.00.

             –   Other Accessories: Skip the engraving and proceed. Consumers can purchase other accessories that could add to the cost of an iPad purchase. For the sake of simplicity, this activity does not consider these purchases.

            b.   Incentives/Discounts: No discounts, rebates, or other incentives are offered.

            c.   Allowances: There are no trade-in allowances offered by Apple for iPads of any kind. However, Gazelle.com (www.gazelle.com) allows consumers to sell their used electronics. Assume that Gazelle offers $160.00 for a 32GB Wi-Fi + 4G LTE 3^rd generation iPad in “Good” condition.

            d.   Extra Fees/Charges: These can include:

             –   AppleCare for iPad: The MSRP for this warranty/customer support for
1 year is $99.00.

             –   Shipping & Handling/Delivery Charges: These are based on distance from the store/warehouse to the consumer’s residence (zip code dependent) and the shipping method used (local delivery, UPS, etc.). Assume that expedited shipping & handling is $50.00 and the delivery charge is free ($0.00). [Charges are based on shipment to Phoenix, AZ.]

             –   Sales Tax: The amount of sales tax depends on the state (and city) where the customer resides. If the Apple iPad was purchased online, Apple is required to collect sales tax. Example: If the purchase address is located in Phoenix, AZ, the estimated sales tax is $95.00.

             –   Finance Charge: This amount depends on the amount financed, the type of credit used (Visa, MasterCard, credit line, etc., interest rate, and term of the loan in years. Assume that you will use a credit card to pay for the purchase but pay off the balance when you receive the bill to avoid any interest charges.

             –   Other Fees/Charges: Consumers can purchase “apps” or services, such as Netflix, Angry Birds, etc. For this activity, there will be no other purchases.

Answer 1

Particular	Price	Total
Apple iPad Air Finish/Model		$929
( + ) Other Expenses related to product
Network Carrier—Verizon for a year ( $70 * 12 )	$840
iPad Air Smart Case—Black Leather	$79
iPad Camera Connection Kit	$29
Apple Wireless Keyboard	$69
Other Accessories ( As per Customer Requirement )	---
Apple Care for iPad	$99
Shipping & Handling/Delivery Charges	$50
Sales Tax	$95
Finance Charge	---
Other Fees/Charges	----	$1,261
Total Expenses occur		$2,190
( - ) Allowances Sale of used Item		$160
Amount to be paid by Consumer to get the iPod $2030

Price for the location of Phoenix, AZ.