Question
You are considering two ways of financing a spring break vacation.You could put it on your credit card, at 15% APR, compounded monthly, or borrow
You are considering two ways of financing a spring break vacation.You could put it on your credit card, at 15% APR, compounded monthly, or borrow the money from your parents, who want an 8% interest payment every six months.Which is the lower rate?(Hint:To answer this question convert both rates to EARs and then compare them)
A. Your parents offer a the lower rate with an EAR of 16.64%.
B. The credit card offers the lower rate with an EAR of 16.07%.
C. The credit card offers the lower rate with an EAR of 15%.
D. Your parents offer a the lower rate with an EAR of 16.07%.
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Foundations Of Finance
Authors: Arthur J. Keown, John H. Martin, J. William Petty
10th Edition
0135160618, 978-0135160619
