B3. Rodney's car engine suddenly stopped working while he was driving to work. The car repair cost was not expected and Rodney needed to borrow $600 to pay the mechanic's bill, As he had a bad credit score, Rodney decided to take a small loan from CashnGo, an Australian payday lender, with a term of 2 months and a fortnightly repayment schedule. CashnGo upfront establishment fees are 20% of the borrowed amount while the monthly fees, which are charged at the end of every month until the debt is fully repaid, are 4% of the borrowed amount. If the direct debit for the payment is rejected at the scheduled date due to a lack of funds, the dishonour fees are $30. CashnGo then reorganises a new schedule for a fee of $15 by postponing all future planned instalmnents by a fortnight. (a) Represent in Rodney's balance sheet the effect of receiving a loan from CashnGo and paying the mechanic's bill with the money from the loan. [lgnore the fees and repayment of the loan] (0.5mark) (b) Calculate Rodney's total fees paid to CashnGo if he is making his loan repayments at the respective due dates. (I mark) (c) Calculate the equivalent annual interest rate that the fees in b) represent. [For that calculation only, assume that all fees are paid at the very end of the two month period] (t mark) (d) Identify Rodney's additional fees (in addition to those already calculated in b)) paid to CashnGo if he misses the last repayment and reschedules it to another date, two weeks after the original schedule. Assume that at the new date he manages to pay. (0.5 mark) (e) Compare the total CashnGo fees incurred by Rodney in the scenario described in d) to the total fees he would have incurred had he decided to be a returning customer with Afterpay. Assume he missed the last Afterpay instalment and repaid it one a fortnight after. Did he make the right move to choose CashnGo? (t mark) (f) Being a student on Youth allowance, single, without children and living away from home, was an application for a NiL with Good Shepperd a feasible option for Rodney? Explain your answer. (1 mark) B3. Rodney's car engine suddenly stopped working while he was driving to work. The car repair cost was not expected and Rodney needed to borrow $600 to pay the mechanic's bill, As he had a bad credit score, Rodney decided to take a small loan from CashnGo, an Australian payday lender, with a term of 2 months and a fortnightly repayment schedule. CashnGo upfront establishment fees are 20% of the borrowed amount while the monthly fees, which are charged at the end of every month until the debt is fully repaid, are 4% of the borrowed amount. If the direct debit for the payment is rejected at the scheduled date due to a lack of funds, the dishonour fees are $30. CashnGo then reorganises a new schedule for a fee of $15 by postponing all future planned instalmnents by a fortnight. (a) Represent in Rodney's balance sheet the effect of receiving a loan from CashnGo and paying the mechanic's bill with the money from the loan. [lgnore the fees and repayment of the loan] (0.5mark) (b) Calculate Rodney's total fees paid to CashnGo if he is making his loan repayments at the respective due dates. (I mark) (c) Calculate the equivalent annual interest rate that the fees in b) represent. [For that calculation only, assume that all fees are paid at the very end of the two month period] (t mark) (d) Identify Rodney's additional fees (in addition to those already calculated in b)) paid to CashnGo if he misses the last repayment and reschedules it to another date, two weeks after the original schedule. Assume that at the new date he manages to pay. (0.5 mark) (e) Compare the total CashnGo fees incurred by Rodney in the scenario described in d) to the total fees he would have incurred had he decided to be a returning customer with Afterpay. Assume he missed the last Afterpay instalment and repaid it one a fortnight after. Did he make the right move to choose CashnGo? (t mark) (f) Being a student on Youth allowance, single, without children and living away from home, was an application for a NiL with Good Shepperd a feasible option for Rodney? Explain your answer. (1 mark)
