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Justin Granovsky is an assistant manager at a small retail shop in Morgantown, West Virginia. He owes $ 5 , 4 0 0 to one
Justin Granovsky is an assistant manager at a small retail shop in Morgantown, West Virginia. He owes $ to one bank, $ to a clothing store, and $ to his credit union. Justin is paying $ per month on the three major obligations to pay them off when due in two years. He realized that his takehome pay of slightly more than $ per month did not leave him with much excess cash. Justin discussed a different way of handling his major payments with his banks loan officer. The officer suggested that Justin pool all of his debts and take out an $ debtconsolidation loan for seven years at percent interest. As a result, he would pay only $ per month for all his debts. Justin seemed ecstatic over the idea.
a
Is Justins enthusiasm over the idea of a debtconsolidation 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 $ as compared with $
d
How much total interest would Justin pay over the seven years, and what would be a justification for this added cost?
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