Question

• Describe a product that you’ve purchased with a warranty. What does this mean for you as the consumer? What does it mean for the company providing the warranty? Why is this a potential liability?

• Have you ever borrowed money? Were you charged interest? Assuming you were charged interest, does each payment apply fully to the principal balance of the loan? Why or why not?

Answer 1

1) A product warranty acts as a guarantee to the consumer that it will perform. However not all warranties are equal. A warranty might cover a product for a lifetime or a matter of days. It may cover all kinds of damage or be limited to specific defects.
2) Any promise about the quality, condition, or reliability of a product that a seller makes and that you rely upon when buying a product can create a warranty or guarantee. A direct statement, either verbally or in writing, promising that a product will meet specific expectations creates an express warranty
3) When a company provides a warranty with its product, the company has an obligation to repair or replace the product if it is defective. That obligation generates a liability at the time the product is sold because the company has a liability that starts when the product is sold
4) Yes , I Borrowed Money from Bank. Yes , Charged Interest
5) each payment does not apply fully to the principal balance of the loan , it will apply to both Principal and Interest .you always pay off interest first, and then any excess goes to pay off the principal.
6) Banks make you pay accrued interest on the current outstanding balance of the loan each month. They want their cost of capital , that's why they gave you the loan in the first place