Homework Help is Here – Start Your Trial Now!
Business
Accounting
Consider the following flyer that you just received. "We have good news, Eric Moon! Your credit history allows us to offer you a guaranteed check of $2,009.06. That's right-a preapproved loan just in time to help with your vacation! It's easy. Just endorse the attached loan check and deposit it in your bank account. Your payment schedule will be 18 equal monthly payments of $150 each, beginning 30 days after your depositing the check in your bank account." a) Suppose you have a credit card. Your credit company charges an annual percentage rate (APR) of 24.99% for cash advances. Determine the APR and effective interest rate of this loan solicitation. Is it better by doing a cash advance in the amount of $2,009.06 on your credit? Answer it by comparing the cash advance option and the loan solicitation option. b) Suppose that you decided to go with a cash advance by making $50 monthly payment until you pay off the loan. What would be the total finance (interest) charge (dollar amount the credit will cost you) for each option? The total finance charge can be calculated by subtracting the amount of money borrowed ($2,009.06) from the total payments.

Consider the following flyer that you just received. "We have good news, Eric Moon! Your credit history allows us to offer you a guaranteed check of $2,009.06. That's right-a preapproved loan just in time to help with your vacation! It's easy. Just endorse the attached loan check and deposit it in your bank account. Your payment schedule will be 18 equal monthly payments of $150 each, beginning 30 days after your depositing the check in your bank account." a) Suppose you have a credit card. Your credit company charges an annual percentage rate (APR) of 24.99% for cash advances. Determine the APR and effective interest rate of this loan solicitation. Is it better by doing a cash advance in the amount of $2,009.06 on your credit? Answer it by comparing the cash advance option and the loan solicitation option. b) Suppose that you decided to go with a cash advance by making $50 monthly payment until you pay off the loan. What would be the total finance (interest) charge (dollar amount the credit will cost you) for each option? The total finance charge can be calculated by subtracting the amount of money borrowed ($2,009.06) from the total payments.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question

2

Problem 2.. Consider the following flyer that you just received. "We have good news, Eric Moon! Your credit history allows us to offer you a guaranteed check of $2,009.06. That's right-a preapproved loan just in time to help with your vacation! It's easy. Just endorse the attached loan check and deposit it in your bank account. Your payment schedule will be 18 equal monthly payments of $150 each, beginning 30 days after your depositing the check in your bank account." a) Suppose you have a credit card. Your credit company charges an annual percentage rate (APR) of 24.99% for cash advances. Determine the APR and effective interest rate of this loan solicitation. Is it better by doing a cash advance in the amount of $2,009.06 on your credit? Answer it by comparing the cash advance option and the loan solicitation option. b) Suppose that you decided to go with a cash advance by making $50 monthly payment until you pay off the loan. What would be the total finance (interest) charge (dollar amount the credit will cost you) for each option? The total finance charge can be calculated by subtracting the amount of money borrowed ($2,009.06) from the total payments.
Transcribed Image Text:Problem 2.. Consider the following flyer that you just received. "We have good news, Eric Moon! Your credit history allows us to offer you a guaranteed check of $2,009.06. That's right-a preapproved loan just in time to help with your vacation! It's easy. Just endorse the attached loan check and deposit it in your bank account. Your payment schedule will be 18 equal monthly payments of $150 each, beginning 30 days after your depositing the check in your bank account." a) Suppose you have a credit card. Your credit company charges an annual percentage rate (APR) of 24.99% for cash advances. Determine the APR and effective interest rate of this loan solicitation. Is it better by doing a cash advance in the amount of $2,009.06 on your credit? Answer it by comparing the cash advance option and the loan solicitation option. b) Suppose that you decided to go with a cash advance by making $50 monthly payment until you pay off the loan. What would be the total finance (interest) charge (dollar amount the credit will cost you) for each option? The total finance charge can be calculated by subtracting the amount of money borrowed ($2,009.06) from the total payments.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Market Efficiency
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS