Question
A) You decide to borrow the 20,000 on a credit card and 30,000 on a payday loan. The credit card quoted interest is 18% compounded
A) You decide to borrow the 20,000 on a credit card and 30,000 on a payday loan. The credit card quoted interest is 18% compounded monthly. The payday loan quoted interest rate is 52% compounded weekly. What is the effective annual rate (EAR) for the credit card and loan?
B) A recession hits after 12 months and you realise that you are unlikely to be repaid. Calculate the outstanding balance on the credit card and loan at 12 months and the monthly payment required on the credit card and weekly payment required on the loan to pay off the balance by the end of 48 months (36 months time).
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