Bridge to College (BTC) is a not-for-profit in the small college town of University Station which encourages
Question:
Bridge to College (BTC) is a not-for-profit in the small college town of University Station which encourages undergraduates to form mentor relationships with local youth. The organization heavily relies on volunteer undergraduates, but maintains a modest staff to coordinate programming and track outcomes. Both the volunteers and the funding for BTC are scarce during the summer months. The organization decided to open a credit card account and use the credit card to cover expenses before revenues come in.
(a) (8 points) If BTC accumulates $50,000 credit card debt on January 1st at 12.5% interest per year, and repays it on June 1st, how much in total are they paying back if the interests are daily compounded? On June 1st, BTC will receive enough revenues to pay off all the balance in its credit card account. (Hint: how many days are there between January 1st and June 1st? Days should be the unit of period for TVM calculation)
(b) (2 points) What is BTC’s interest expense because of credit card use?
Managing Information Technology
ISBN: 978-0132146326
7th Edition
Authors: Carol Brown, Daniel DeHayes, Jeffrey Hoffer, Wainright Marti