You are considering two ways of financing a spring break vacation. You could put it on your credit card, at 18% APR, compounded monthly, or borrow the money from your parents, who want an interest payment of 9% every six months. Which is the lower rate? (Note: Be careful not to round any intermediate steps less than six decimal places.) ..... The effective annual rate for your credit card is 19.56 %. (Round to two decimal places.) The effective annual rate for the loan from your parents is 18.81 %. (Round to two decimal places.) The option with the lower effective annual rate is the loan from your parents (Select from drop-down menu.)
You are considering two ways of financing a spring break vacation. You could put it on your credit card, at 18% APR, compounded monthly, or borrow the money from your parents, who want an interest payment of 9% every six months. Which is the lower rate? (Note: Be careful not to round any intermediate steps less than six decimal places.) ..... The effective annual rate for your credit card is 19.56 %. (Round to two decimal places.) The effective annual rate for the loan from your parents is 18.81 %. (Round to two decimal places.) The option with the lower effective annual rate is the loan from your parents (Select from drop-down menu.)
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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Transcribed Image Text:You are considering two ways of financing a spring break vacation. You could put it on your credit card, at 18% APR, compounded monthly, or borrow the money from
your parents, who want an interest payment of 9% every six months. Which is the lower rate? (Note: Be careful not to round any intermediate steps less than six
decimal places.)
The effective annual rate for your credit card is 19.56 %. (Round to two decimal places.)
The effective annual rate for the loan from your parents is 18.81 %. (Round to two decimal places.)
The option with the lower effective annual rate is the loan from your parents
(Select from drop-down menu.)
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