{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Problems for final

# Problems for final - Chapter 6 Monty Head Monty currently...

This preview shows pages 1–4. Sign up to view the full content.

Chapter 6 Monty Head Monty currently has a Visa card from his Bank with the following terms: 18% on purchases, 24% on cash advances with a 4% cash advance fee on the amount, and a default or penalty rate of 36%. His current statement shows a balance of \$6,000. So far the only cash advance he ever got was exactly one year ago when he withdrew \$1,000 from a Casino in Las Vegas. Lately he has been having a hard time paying more than the minimum payment of 4% of his balance. The only assets he owns is a seven year old car and a \$2,500 Certificate of Deposit that has a 5% APR. 26) What will be Monty's minimum payment due? A) \$90 B) \$20 C) \$240 6000*4%=\$240 D) \$1,080 E) none of the above Answer: C Diff: 3 Topic: Credit 27) What is the current APY on this credit card? 28) How much of his payment will apply towards his cash advance balance? 29) If Monty buys a new television for \$800 this month and sends in a credit card payment of \$1200 when he gets his statement how much interest will he pay on the television for the month?

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
30) If Monty sends in a payment for \$1,000, how much will be applied to his balance that he owes? (use the \$6,000 balance for your calculations). A) \$910 B) \$1,000 C) \$1,080 D) His balance will actually increase by \$80 Answer: A Diff: 3 Topic: Interest Rates 31) It is now three months later and Monty has missed two payments in a row and he is now paying the default or penalty rate on his balance. How much interest per month will Monty be accruing on his unpaid balance? 32) What is the APY on Monty's default or penalty rate? Chapter 7 8) The quoted rate on a home equity loan is 10% and you are in a 28% marginal tax bracket. What is the effective after-tax rate on this loan? 9) You are considering a home equity loan. Your marginal tax bracket is 28%. You want to borrow \$50,000 and are quoted an APR of 12%. How much money would you save in taxes each year if you use the tax-deductible home equity loan? A) \$6,000 B) \$4,320 C) \$1,680 50000*0.12*0.28=\$1680 D) none of the above Answer: C Diff: 2 Topic: Home Equity Loan
19) Congratulations! You have just graduated from college and are determining what your monthly student loan payments will be. After consolidating all of your loans, you have a balance of \$18,000. At 8% APR for 10 years, what will your monthly payments be? A) \$1,866.66 B) \$161.50 C) \$218.39 n=10*12=120; i=8/12=0,667;PV=18000;FV=0;PMT-? D) \$1,440.14 Answer: C Diff: 3 Topic: Principle 3: The time-value-of-money

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}