Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
Please solve part E Only
![Silver Visa, Fast Card, and Mach Express are three credit card companies that charge different interest on
overdue balances. Silver Visa charges 24% compounded daily, Fast Card charges 25% compounded weekly,
and Mach Express charges 26% compounded monthly. (Hint: 1 year could be 365 or 52 weeks)
a) What is the effective annual interest rate charged by each of the three credit cards?
b) What is the effective semi-annual interest rate charged by each of the three credit cards?
c) Which credit card would you prefer?
d) How much should the interest rate be for Silver Visa in order to break-even with Fast Card?
e) find effective quarterly rate charged by each credit cards](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F29a1799a-d63a-4653-8ed8-c47864ab5389%2Fded6a372-5bbd-4dbe-aa3c-72712afaaf11%2F0uxlnyc_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Silver Visa, Fast Card, and Mach Express are three credit card companies that charge different interest on
overdue balances. Silver Visa charges 24% compounded daily, Fast Card charges 25% compounded weekly,
and Mach Express charges 26% compounded monthly. (Hint: 1 year could be 365 or 52 weeks)
a) What is the effective annual interest rate charged by each of the three credit cards?
b) What is the effective semi-annual interest rate charged by each of the three credit cards?
c) Which credit card would you prefer?
d) How much should the interest rate be for Silver Visa in order to break-even with Fast Card?
e) find effective quarterly rate charged by each credit cards
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