Tutorial_L04_Q - 3. You are prepared to borrow $4,000 for...

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CC3152 Principles of Financial Planning Tutorial 4 – Questions on Lecture 4 CREDIT MANAGEMENT 1 Discussion Questions 1. Mr. Chan has a monthly take-home pay of $16,850; he makes payments of $4,100 a month on his outstanding consumer credit (excluding the mortgage on his home). What are your comments on Mr. Chan’s debt burden? What if his take-home pay was $8,500 a month and he had monthly credit payments of $1,500. 2. Distinguish “open account credit” with “consumer loan”.
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Unformatted text preview: 3. You are prepared to borrow $4,000 for 18 months. Bank A will lend through a single-payment loan at 13.5% discount . Bank B will lend through a single-payment loan at 15% using the simple interest method. Which bank will you choose to borrow the money? 4. What two questions should be answered before taking out a consumer loan? Explain. 5. When does it make more sense to pay cash for a big-ticket item than to borrow the money to finance the purchase, and vise versa?...
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This note was uploaded on 03/17/2009 for the course AF 3152 taught by Professor Peggy during the Spring '09 term at Hong Kong Polytechnic University.

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