Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Your FICO score makes a big difference in how lenders determine what interest rate to charge you. Consider the situation faced by Edward and Jorge.

image text in transcribed

Your FICO score makes a big difference in how lenders determine what interest rate to charge you. Consider the situation faced by Edward and Jorge. Edward has a fairly poor FICO score of 660 and, as a result, pays 1 8.0% APR on the unpaid balance of his credit card. Jorge has a FICO score of 740 and pays only 7.1% APR on the unpaid balance of his credit card. If both persons carry an average balance of $4,000 on their credit cards for three years, how much more money will Edward repay compared with what Jorge owes (moral: you want a high FICO score)? Assume monthly compounding of interest. Edward will repay $ more. (Round to the nearest dollar.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Principles Of Financial Modelling Model Design And Best Practices Using Excel And VBA

Authors: Michael Rees

1st Edition

111890401X, 978-1118904015

More Books

Students also viewed these Finance questions