Mirai has great difficulty managing her debt. She usually carries a balance on her credit card, has maxed out her $15,000 line of credit and now finds herself in the position of having to borrow to purchase a car.

PART A:

Assume Mirai's credit card balance is $2,000. If she doesn't use the card again and only makes the minimum 3% payment every month, how long would it take her to pay off the balance on her card? The interest rate is 21%, compounded daily.

PART B:

Mirai's line of credit charges an APR of 7%, compounded monthly. She was charged a $200 service fee to set it up. What is the effective annual cost of her line of credit, assuming full draw down?

PART C:

If Mirai choses to lease a car instead of purchase one, identify two advantages and two disadvantages of doing so.

Please answer all three parts showing all the work.

Formula sheet provided + info if needed:

TABLE A 2018 Combined Federal and Quebec Personal Income Tax Brackets and Tax Rates 2018 Taxable income 2018 Tax Rates 2018 Taxable lncome 2018 Tax Rates rst 543,055 27.53% over $93,203 up to $104,765 45.71% over $43,055 up to $46,605 32.53% over $104,765 up to $144,489 47.46% over $46,605 up to $86,105 37.12% over $144,489 up to $205,842 49.97% over $86,105 up to $93,208 41.12% over $205,842 53.31% TABLE B Tax-Free Savings Account (TFSAJ Annual Limits Year Annual Limit Annual Limit Year started 2009 $5,000 $5,500 2010 $5,000 $10,000 2011 $5,000 $5,500 2012 $5,000 $5,500 2013 $5,500 $5,500 TABLE C Time Value of Money Formulas Simple Interest l= Pxx T Future Value of an Annuity or series of payments l PV=PMT[1-[1/(i+i)"]] PVM[IU_>] 0, Present Value of an Annuity or series of payments l Time Value: Pi! = Future value L= Annual interest rate When compounding is more than once a year, PV= Present value it = Number of time periods W = PV (1 + Urn)" PMT = PMT or regular 3'10in m = Number of compounding periods per year