Jennifer Lee, an engineering major in her junior year, has received in the mail two guaranteed-line-of-credit applications from two different banks. Each bank offers a different annual fee and finance charge. Jennifer expects her average monthly balance after payment to be $500 and plans to keep the card she chooses for only 24 months. (After graduation, she will apply for a new card.) Jennifer's interest rate (on her savings account) is 8% compounded daily. Terms Bank A Bank B Annual fee $2S FreeFinance charge 1.65% monthly interest rate 20% annual percentage rate(a) Compute the effective annual interest rate for each card.(b) Which bank's credit card should Jennifer choose?
Jennifer Lee, an engineering major in her junior year, has received in the mail two guaranteed-line-of-credit applications from two different banks. Each bank offers a different annual fee and finance charge. Jennifer expects her average monthly balance after payment to be $500 and plans to keep the card she chooses for only 24 months. (After graduation, she will apply for a new card.) Jennifer's interest rate (on her savings account) is 8% compounded daily.
Terms Bank A Bank B
Annual fee $2S Free
Finance charge 1.65% monthly interest rate 20% annual percentage rate
(a) Compute the effective annual interest rate for each card.
(b) Which bank's credit card should Jennifer choose?
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