You have credit card debt amounting to RM50,000. The card charges you a 32% interest rate with monthly compounding. You believe that the interest rate of the existing debt is too high, so decide to switch cards and transfer the outstanding balance to the new card. After doing some research, you find Cards B and C as alternatives. If you transfer the existing debt to Card B or Card C, there will be extra charges (handling fees). Card B will charge RM500, and Card C will charge RM1,000 handling fees.
You have credit card debt amounting to RM50,000. The card charges you a 32% interest rate with monthly compounding. You believe that the interest rate of the existing debt is too high, so decide to switch cards and transfer the outstanding balance to the new card. After doing some research, you find Cards B and C as alternatives. If you transfer the existing debt to Card B or Card C, there will be extra charges (handling fees). Card B will charge RM500, and Card C will charge RM1,000 handling fees.
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
Related questions
Question
Please answer them in a comprehensive and step-by-step solution format. Reject any form of excel sheet's solution. Just do it manually. Thanks
Transcribed Image Text:Q4
You have credit card debt amounting to RM50,000. The card charges you a 32% interest
rate with monthly compounding. You believe that the interest rate of the existing debt is
too high, so decide to switch cards and transfer the outstanding balance to the new card.
After doing some research, you find Cards B and C as alternatives. If you transfer the
existing debt to Card B or Card C, there will be extra charges (handling fees). Card B will
charge RM500, and Card C will change RM1,000 handling fees.
Card
B
с
(b)
Table Q4: Credit Card Debt
Interest Rate
29
28
Outstanding Amount (RM)
(a) Calculate the amount of interest saved using card B and C, if you pay off the debt
in one year with equal monthly amounts.
50,500
51,000
Justify the chosen card, with appropriate reasons
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps
Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education