(a) Is Justin’s enthusiasm over the idea of a debt-consolidation loan justified? Why or why not?
(b) Why can the bank offer such a “good deal” to Justin?
(c) What compromise would Justin make to remit payments of only $250 as compared with $460?
(d) How much total interest would Justin pay over the seven years, and what would be a justification for this added cost?

Justin Granovsky, an assistant manager at a small retail shop in Lubbock, Texas, had an unusual amount of debt. He owed $5400 to one bank, $1800 to a clothing store, $2700 to his credit union, and several hundred dollars to other stores and individuals. Justin was paying more than $460 per month on the three major obligations to pay them off when due in two years. He realized that his take-home pay of slightly more than $2100 per month did not leave him with much excess cash. Justin discussed a different way of handling his major payments with his bank’s loan officer. The officer suggested that he pool all of his debts and take out an $11,000 debt-consolidation loan for seven years at 21 percent. As a result, he would pay only $250 per month for all his debts. Justin seemed ecstatic over the idea.