Credit vs. Cash Answers

Listed below are the balances and annual percentage rates for Jimmy's credit cards. If Jimmy makes the same payment each month to pay off his entire credit card debt in the next 12 months, how much will he have paid in interest in the 12 month period?(Hint, find out how much interest Jimmy pays to each card over the 12 months seperately, and then add them together.) Credit Card Current Balance APR A $563.00 16% B $2,525.00 21% C $972.00 19% a. $321.83 b. $370.75 c. $449.24 d. $730.80 Please select the best answer from the choices provided

Which answer choice does not represent an advantage to using credit cards over other forms of payment?a.payments made online with credit cardb.payments made abroad with credit cardc.emergency contact number for lost cardd.interest due on outstanding balance

Paul is going to buy a collectible vintage painting from a local art gallery. The painting is priced at $600 in the gallery. The gallery owner does accept credit cards but prefers cash. In fact, he offers to give Paul a 5% discount if he can pay in cash. Paul doesn't have any cash but can get a cash advance on his credit card. His credit card has an APR of 16% on credit purchases and a 32% APR on cash advances. Assuming Paul wants to pay the painting off over 12 months, which of the following is true? a. Paul will pay a total of $696, over 12 months, if he purchases the painting with his credit card. b. Paul will pay a total of $653.28, over 12 months, if he purchases the painting with his credit card. c. Paul will pay a total of $782.40, over 12 months, if he purchases the painting with a cash advance for discounted purchase price. d. Paul will pay a total of $708.96, over 12 months, if he purchases the painting with a cash advance for discounted purchase price. Please select the best answer from the choices provided.

Which of the following is not a disadvantage of using credit instead of cash?a.Credit cards increase the likelihood of impulse buying.b.Credit cards can be used to increase your credit score.c.Credit cards generally come with interest and other fees that cash does not.d.Credit cards require a good credit rating and responsible credit maintenance.

Bill was going to purchase a new mountain bike with his credit card, which he thought had an APR of 13%. His plan was to keep his payments around $75 per month for 24 months. He then found out that his credit card actually had an APR of 17%. Which of the following would not allow Bill to purchase a bike while keeping the same monthly payment?a.Purchase a bike that costs less.b.Wait for the bike he wants to go on sale for a cheaper price.c.Purchase the bike in a part of town with a higher sales tax rate.d.Increase the number of months he wants to use to pay off the balance.

Tom is in dire need of a new washing machine. He knows what model he would like to get, but doesn't have the cash to pay for it. He plans to get a line of credit (credit card) at the store when he purchases his new washer. He found four different stores that carry the same washing machine for different prices. The lines of credit they offer also come with different APRs. Tom's primary goal is to minimize his monthly payment as he pays the washing machine off over the next 18 months. From which of the four stores should Tom purchase his washing machine? StorePrice ($)Credit Card APRBob's Nuts and Bolts$450.0021%Steve's Scratch and Dent$405.0022%Wally's Washing Machines$432.0019%Al's Appliances$475.0016% a.Bob's Nuts and Boltsb.Steve's Scratch and Dentc.Wally's Washing Machinesd.Al's Appliances

Ralph is purchasing a new gaming system for $300.00. He is trying to decide whether he wants to use cash or his credit card to pay. He has $600.00 available in his checking account. Which of the following is not an argument that justifies Ralph's use of his cash to purchase the gaming system?a.Using cash can help Ralph improve his credit score.b.Using cash may limit overspending or impulse buying.c.Cash doesn't come with any potential "over limit" or "late payment" fees.d.Cash will be the easiest method of payment with very few security measures involved.

Which of the following is not a disadvantage of using cash instead of credit?a.Using cash will not help you improve your credit rating.b.Using cash can be awkward when making large purchases.c.Using cash generally requires trips to the bank or ATM to keep cash on hand.d.Using cash can make it easier to over-spend since you know exactly how much you have.

Describe the effect an increase in i, the interest rate applied to the present value, has on the monthly payment P in the formula a. An increase in i, the interest rate, will not change P, the monthly payment. b. An increase in i, the interest rate, will create an increase in P, the monthly payment. c. An increase in i, the interest rate, will create a decrease in P, the monthly payment. d. An increase in i, the interest rate, can increase or decrease P, the monthly payment, depending on the value of PV. Please select the best answer from the choices provided

Which of the following is not a benefit to using credit instead of cash? a. Using credit can help you build a good credit rating. b. Using credit allows you to make impulsive buys. c. Using credit makes it easier to track your spending than cash. d. Using credit offers a convenient source of funds in an emergency. Please select the best answer from the choices provided