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

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

View Full Document Right Arrow Icon
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? A) 18% B) 18.66% C) 18.99% D) 19.56% E) none of the above Answer: D Diff: 3 Topic: APR 28) How much of his payment will apply towards his cash advance balance? A) 4% B) 18% C) 24% D) none of the above Answer: D Diff: 3 Topic: Cash Advance Fee 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? A) 18% B) 1.5% C) None since he paid the television charge in full during the grace period. D) None of the above. Answer: B Diff: 3 Topic: Grace Period
Background image of page 1

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

View Full DocumentRight Arrow Icon
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? A) 18% B) 1.5% C) 36% D) 3% Answer: D Diff: 3 Topic: Interest Rates 32) What is the APY on Monty's default or penalty rate? A) 36% B) 36.99% C) 42.58% D) 48.66% Answer: C Diff: 3 Topic: APR 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? A) 7.2% 10*(1-0,28)=7.2% B) 5.4% C) 4.1% D) 2.8% E) none of the above Answer: A Diff: 2 Topic: Home Equity 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
Background image of page 2
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?
Background image of page 3

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

View Full DocumentRight Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 10

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

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online