Question
Ryan recently purchased a home. After a nasty windstorm, Ryan needs to do some emergency roof repairs. This is an unexpected cost of $12,000. He
Ryan recently purchased a home. After a nasty windstorm, Ryan needs to do some emergency roof repairs. This is an unexpected cost of $12,000. He currently has no emergency funds, and due to the age of the roof it is not covered by his home insurance.
The following are the financing options Ryan is deciding between:
Option #1: His GH Credit Card which charges 19% p.a. compounded daily. If this option is selected Ryan plans to pay off the balance in 36 months using equal monthly payments.
Option #2: Loan Company will lend Ryan $12,000 today with terms that require Ryan to repay in 36 monthly installments of $500 each month.
Ryan has contacted you to assist him with selecting the best option. Ryans only consideration for the decision is to pay the least amount of interest.
Required
- How much would the monthly payments be for Option #1, using his GH Credit Card?
b. Which option should Ryan choose and why? Show all calculations.
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Extreme Financial Risks From Dependence To Risk Management
Authors: Yannick Malevergne, Didier Sornette
1st Edition
354027264X, 3540272666, 9783540272649, 9783540272663
