Solving Probler Credit GOAL YOU WILL NEED calculator financial application .spreadsheet software Solve problems that involve credit. INVESTIGATE the Math Liam wants to buy a carving by Inuvialuit artist Eli Nasogaluak. He thinks it will cost $3900 and is considering these two credit options: A line of credit, which has a limit of $10 000 and an interest rate of 2%, compounded daily, above the Bank of Canada prime rate (which is currently 0.5%), to be repaid in 16 monthly payments EXPLORE... Suppose that you want to make a purchase of $2000 and you can afford monthly payments of $120. At what interest rate is the store credit card below a better choice than the bank credit card? Assume that the same number of payments is made for both credit cards. a bank credit card at 15% interest, compounded daily a store credit card at % interest, compounded daily. with a $100 rebate on the purchase Eli Nasogalua toka photograph of his of a polar bear . A bank loan at 4%, compounded monthly, to be repaid in one the end of the term Liam chose the bank loan when he found out that the interest amo would be the same as he would pay if he used the line of credit line of credit A pre-approved loan that offers immediate access to funds, up to a pre-defined limit, with a minimum monthly payment based on accumulated interest; a secure line of credit has a lower interest rate because it is guaranteed against the client's assets, usually property. What is the term for Liam's bank loan? A. How much interest would Liam pay if he used the line of credit B. Predict whether the term for Liam's bank loan will be more or la than 16 months. Explain. c. What term for the bank loan will accumulate the same amount interest as the line of credit? Bank of Canada prime rate A value set by Canada's central bank, which other financial institutions use to set their interest rates Reflecting D. Why do you think Liam chose the bank loan over the line E. Why might he choose the line of credit instead? 104 Chapter 2 Financial Mathematics: Borrowing Money