Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Problem 2. (10 points) Consider the following flyer that you just received. We have good news, Eric Moon! Your credit history allows us to offer
Problem 2. (10 points) Consider the following flyer that you just received. "We have good news, Eric Moon! Your credit history allows us to offer you a guaranteed check of $2,009.06. That's righta preapproved loan just in time to help with your vacation! It's easy. Just endorse the attached loan check and deposit it in your bank account. Your payment schedule will be 18 equal monthly payments of $150 each, beginning 30 days after your depositing the check in your bank account." a) Suppose you have a credit card. Your credit company charges an annual percentage rate (APR) of 24.99% for cash advances. Determine the APR and effective interest rate of this loan solicitation. Is it better by doing a cash advance in the amount of $2,009.06 on your credit? Answer it by comparing the cash advance option and the loan solicitation option. b) Suppose that you decided to go with a cash advance by making $50 monthly payment until you pay off the loan. What would be the total finance (interest) charge (dollar amount the credit will cost you) for each option? The total finance charge can be calculated by subtracting the amount of money borrowed ($2,009.06) from the total payments. Problem 2. (10 points) Consider the following flyer that you just received. "We have good news, Eric Moon! Your credit history allows us to offer you a guaranteed check of $2,009.06. That's righta preapproved loan just in time to help with your vacation! It's easy. Just endorse the attached loan check and deposit it in your bank account. Your payment schedule will be 18 equal monthly payments of $150 each, beginning 30 days after your depositing the check in your bank account." a) Suppose you have a credit card. Your credit company charges an annual percentage rate (APR) of 24.99% for cash advances. Determine the APR and effective interest rate of this loan solicitation. Is it better by doing a cash advance in the amount of $2,009.06 on your credit? Answer it by comparing the cash advance option and the loan solicitation option. b) Suppose that you decided to go with a cash advance by making $50 monthly payment until you pay off the loan. What would be the total finance (interest) charge (dollar amount the credit will cost you) for each option? The total finance charge can be calculated by subtracting the amount of money borrowed ($2,009.06) from the total payments
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started