Loan rates of interest You have credit card debt amounting to $50,000. The card charges you...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Loan rates of interest You have credit card debt amounting to $50,000. The card charges you a 32% interest rate with monthly compounding. You believe that the interest rate of the existing debt is too high, so you decide to switch cards and move the outstanding balance on the old card to the new card. After doing some research, you find Cards A, B, and C as alternatives. If you move the existing debt to Card B or Card C, there will be extra charges (handling fees). Card B will charge $500, and Card C will charge $1,000 handling fees. Card A B с Interest rate 30% 29 28 Outstanding amount $50,000 50,500 $1,000 a. If you pay off the debt in one year with equal monthly amounts, how much in in- terest payments have you saved by using (1) Card A, (2) Card B, and (3) Card C rather than keeping your existing card? b. Which card should you choose? Loan rates of interest You have credit card debt amounting to $50,000. The card charges you a 32% interest rate with monthly compounding. You believe that the interest rate of the existing debt is too high, so you decide to switch cards and move the outstanding balance on the old card to the new card. After doing some research, you find Cards A, B, and C as alternatives. If you move the existing debt to Card B or Card C, there will be extra charges (handling fees). Card B will charge $500, and Card C will charge $1,000 handling fees. Card A B с Interest rate 30% 29 28 Outstanding amount $50,000 50,500 $1,000 a. If you pay off the debt in one year with equal monthly amounts, how much in in- terest payments have you saved by using (1) Card A, (2) Card B, and (3) Card C rather than keeping your existing card? b. Which card should you choose?
Expert Answer:
Answer rating: 100% (QA)
To determine the interest savings and choose the best card we need to calculate the interest payment... View the full answer
Related Book For
Posted Date:
Students also viewed these finance questions
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
Planning is one of the most important management functions in any business. A front office managers first step in planning should involve determine the departments goals. Planning also includes...
-
Read the case study "Southwest Airlines," found in Part 2 of your textbook. Review the "Guide to Case Analysis" found on pp. CA1 - CA11 of your textbook. (This guide follows the last case in the...
-
50 Kg of ammonium sulphate (NH4)2SO4 and 30 Kg of urea CO(NH2)2 fertilizers were applied in two equal sizes of plots A and B to enrich their nitrogen content. Show by working which plot was more...
-
Doris mistakenly accused Peters son, Steven, of negligently burning down her barn. Peter believed that his son was guilty of the wrong and that he, Peter, was personally liable for the damage, as...
-
Use a geometric series or the nth-Term Test to determine the convergence or divergence of the series. 9-" n=0
-
What do you know about the mathematical value of the annual worth of a project under each of the following conditions? a. The present worth of the project is greater than 0 . b. The present worth of...
-
Moontrust Bank has asked the president of Wishware Products, Inc., for a budgeted income statement and budgeted balance sheet for the quarter ended June 30. These pro forma financial statements are...
-
8. A straight section of railroad track crosses two highways 400 m and 600 m from an intersection. Find the dimensions of the largest rectangular lot that can be laid out in the triangle formed by...
-
Pasqual Melo is employed by a public corporation. On January 1, 2019, she was given an option to purchase 1,000 shares of the public corporation for $8 per share (the option extended for two years)....
-
1. Elsinore assumes it can grow its dividend by 5% a year forever. If the last dividend paid was $2 and the required rate of return is 10%, what is the current share price (approximately)? 2. a) $40...
-
Develop replenishment policies to improve synchronization in multiechelon supply chains.
-
Offering a promotion during a peak period that has significant forward buying creates a desirable demand pattern. creates a demand pattern less costly to serve. creates a demand pattern even more...
-
Amazon sells 20,000 units of consumer electronics from Samsung every month. Each unit costs $100 and Amazon has an annual holding cost of 20 percent. The fixed clerical and transportation cost for...
-
An effective revenue management tactic when faced with seasonal peaks is to charge a high price during the peak period and a higher price during off-peak periods. low price during the peak period and...
-
Understand the impact of trade promotions on lot size and cycle inventory.
-
In 2014, Indigo was struggling to stay afloat in an industry that was rapidly changing. Revenues had decreased by 4.4% from the previous year with the second quarter of fiscal 2014 experiencing a net...
-
The column shown in the figure is fixed at the base and free at the upper end. A compressive load P acts at the top of the column with an eccentricity e from the axis of the column. Beginning with...
-
Boeing Corporation has just issued a callable (at par) three-year, 5% coupon bond with semiannual coupon payments. The bond can be called at par in two years or anytime thereafter on a coupon payment...
-
Etemadi Amalgamated, a U.S. manufacturing firm, is considering a new project in Portugal. You are in Etemadi's corporate finance department and are responsible for deciding whether to undertake the...
-
The dollar cost of debt for Healy Consulting, a U.S. research firm, is 7.5%. The firm faces a tax rate of 30% on all income, no matter where it is earned. Managers in the firm need to know its yen...
-
In 1984, the number of German marks required to buy one U.S. dollar was 1.80. In 1987, the U.S. dollar was worth 2.00 marks. In 1992, the dollar was worth 1.50 marks. In 1997, the dollar was again...
-
Todays spot rate is S 0 $ = $0.009057355. The 90-day forward rate is F 1 $ = $0.008772945. a. Calculate the forward premium on Japanese yen in basis points and as a percentage premium or discount...
-
Describe locational, triangular, and covered interest arbitrage.
Study smarter with the SolutionInn App