You decide to treatyour friends to a €20,000 luxury trip to the tent village at WorldCup in Qatar. You must borrow the full amount (€20,000) on your credit card. The interest rate is 2.0 percent per month, compounded on a monthly basis. (20 Points) Required: i. Assuming there no additional fees or late payment fees, what is the future balance of your credit card if you make no payments for 5 years based on the interest rate above? ii. How long will it take you to payoff this debt assuming that you do not charge anything else and only make regular monthly payments of €500? iii. After 12 months of making €500 monthly payments on your credit card, Easy Bank offers you an amortising loan with the same payment of €500 but with an effective annual rate of 6.17%. How long will it take to payoff the loan?
You decide to treatyour friends to a €20,000 luxury trip to the tent village at WorldCup in Qatar. You must borrow the full amount (€20,000) on your credit card. The interest rate is 2.0 percent per month, compounded on a monthly basis. (20 Points) Required: i. Assuming there no additional fees or late payment fees, what is the future balance of your credit card if you make no payments for 5 years based on the interest rate above? ii. How long will it take you to payoff this debt assuming that you do not charge anything else and only make regular monthly payments of €500? iii. After 12 months of making €500 monthly payments on your credit card, Easy Bank offers you an amortising loan with the same payment of €500 but with an effective annual rate of 6.17%. How long will it take to payoff the loan?
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 decide to treatyour friends to a €20,000 luxury trip to the tent village at WorldCup
in Qatar. You must borrow the full amount (€20,000) on your credit card. The interest rate
is 2.0 percent per month, compounded on a monthly basis. (20 Points)
Required:
i.
Assuming there no additional fees or late payment fees, what is the future
balance of your credit card if you make no payments for 5 years based on the
interest rate above?
ii. How long will it take you to payoff this debt assuming that you do not charge anything
else and only make regular monthly payments of €500?
iii. After 12 months of making €500 monthly payments on your credit card, Easy Bank
offers you an amortising loan with the same payment of €500 but with an effective
annual rate of 6.17%.
How long will it take to payoff the loan?
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