5. Kumal wants to sell her townhouse in Whitehorse. She will spend $2100 updating her home. She has $2100 in cash, but she plans to buy a $2100 RRSP. She will need 120 d to pay off any loan. Interest is compounded daily. a) Complete the chart. Option secured personal loan ARSP loan no loan Detalia Buy the RRSP with $2100 cash. Pay for updating with the loan using her home equity as collateral. credit card Pay for updating with the $2100. Buy an RRSP with an RRSP loan. Pay for updating with the $2100. Do not get an RRSP APR 2.75% 1.75% 0% Buy an RRSP with the $2100. Pay for updating with a credit card with a 30 d grace period. b) Which option should Kumal choose? Explain why. 20.1% Total amount PH+T c) Which option should Kumal not choose? Explain why. d) Suppose Kumal uses a RRSP loan instead of her credit card. How much interest will she save? What is equity? What is it used for? Interect/i-A-P REFLECTING Suppose Kumal has a loan with simple interest instead of compound Interest. How would the total interest be different? BANK
5. Kumal wants to sell her townhouse in Whitehorse. She will spend $2100 updating her home. She has $2100 in cash, but she plans to buy a $2100 RRSP. She will need 120 d to pay off any loan. Interest is compounded daily. a) Complete the chart. Option secured personal loan ARSP loan no loan Detalia Buy the RRSP with $2100 cash. Pay for updating with the loan using her home equity as collateral. credit card Pay for updating with the $2100. Buy an RRSP with an RRSP loan. Pay for updating with the $2100. Do not get an RRSP APR 2.75% 1.75% 0% Buy an RRSP with the $2100. Pay for updating with a credit card with a 30 d grace period. b) Which option should Kumal choose? Explain why. 20.1% Total amount PH+T c) Which option should Kumal not choose? Explain why. d) Suppose Kumal uses a RRSP loan instead of her credit card. How much interest will she save? What is equity? What is it used for? Interect/i-A-P REFLECTING Suppose Kumal has a loan with simple interest instead of compound Interest. How would the total interest be different? BANK
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Transcribed Image Text:5. Kumal wants to sell her townhouse in Whitehorse. She will
spend $2100 updating her home. She has $2100 in cash, but
she plans to buy a $2100 RRSP. She will need 120 d to pay
off any loan. Interest is compounded daily.
a) Complete the chart.
Option
secured
personal loan
RRSP loan
no loan
credit card
Detalle
Buy the RRSP with
$2100 cash. Pay for
updating with the loan
using her home equity
as collateral.
Pay for updating
with the $2100. Buy
an RRSP with an
RRSP loan.
Pay for updating with
the $2100. Do not get
an RRSP.
Buy an RRSP with the
$2100. Pay for updating
with a credit card with a
30 d grace period.
1125
APR
2.75%
1.75%
0%
20.1%
Total amount
A-PH1+
62
b) Which option should Kumal choose? Explain why.
c) Which option should Kumal not choose? Explain why.
d) Suppose Kumal uses a RRSP loan instead of her credit
card. How much interest will she save?
What is equity? What is it used for?
Total
Interest/A-P
REFLECTING
Suppose Kumal
has a loan with
simple interest
nstead of
compound Interest.
How would the
total interest be
different?
BANK
Chapter 5 Interest: Borrowing Money
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