ASSIGNMENT # 4

1. You are considering two ways of financing a spring break vacation. You could put it on your credit card, at 15% APR , compounded monthly, or borrow the money from your friend, who wants an 8% payment every six months. Which is the lower rate?

2. You have found three investment choices for a one - year deposit: 10% APR compounded monthly, 10% APR compounded annually, and 9% APR compounded daily.

Compute the EAR for each investment choice. ( Assume there are 365 days in the year)