Credit vs. Cash Answers

As a New Year's resolution, Jimmy has agreed to pay off his 4 credit cards and completely eliminate his credit card debt within the next 12 months. Listed below are the balances and annual percentage rates for Jimmy's credit cards. In order to pay his credit card debt off in the next 12 months, what will Jimmy's total minimum credit card payment be? Credit CardCurrent BalanceAPRA$563.0016%B$2,525.0021%C$972.0019%D$389.0017% a.$321.83b.$361.45c.$374.65d.$411.25

Tim would like to use his income tax return to pay off one of his four credit cards. His previous plan was to pay off all four credit cards in the same timeline of 36 months. He wants to eliminate the card that is charging him the most interest on a monthly basis. The chart below outlines Tim's four credit cards, their balances, and their APRs. Which credit card should Tim use his tax return to pay off? Credit CardBalanceAPRA$1,260.0012%B$900.0018%C$1,290.009%D$1,200.0016% a.Ab.Bc.Cd.D

Credit cards can only lead to debt that is difficult to eliminate and should be avoided at all costs.

Jason is looking for an engagement ring to offer his girlfriend. He has found a similar ring at each of four different jewelry stores. He doesn't have enough money to pay for the ring in cash, so he is planning on opening a line of credit (credit card) at the store he ends up buying the ring from. The chart below outlines the difference in the price of the rings the different stores offer as well as the difference in credit options. Jason plans to pay off the ring purchase in 36 months. According to the information in the table, which of the jewelry stores will have the cheapest ring in the end? StorePrice ($)Credit Card APRJessie's Jewelry$1,250.0019%Über Pawn$1,328.0018.5%Diamonds Forever$1,199.0021%Drake and Family Gold$1,219.0020% a.Jessie's Jewelryb.Über Pawnc.Diamonds Foreverd.Drake and Family Gold

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

Bob’s car needs a new transmission, a repair that will cost $1,763.00. Bob does not have enough money in his savings account to cover the cost of the repair. To make matters worse, Bob’s mechanic, who works out of his home, is unable to accept credit cards. Bob is hesitant to take out a cash advance on his credit card knowing that it will take him 12 months to pay of the balance and that a cash advance comes with a 30% interest rate. If Bob uses a cash advance to pay for the repairs, how much extra will he have to pay in interest?a.$146.92b.$171.87c.$299.44d.$528.90

The higher interest rate of a cash advance on a credit card with an existing balance can be eliminated by paying the cash advance back within four weeks.

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 $400.00 available in his checking account to pay for the system in full. Which of the following is not an argument that justifies Ralph’s use of his credit card to purchase the gaming system? a. If he uses his credit card, he won’t have to walk around with $300 in his wallet. b. With credit, he is not required to pay off his balance for a very long time. That’s $300 more in his pocket. c. Ralph can afford to pay off the credit card purchase immediately, and it will help build a good credit rating. d. If he uses his credit card, it will be easier to pay for extra items (cords and controllers) that he wasn’t expecting to have to purchase. Please select the best answer from the choices provided

Sally needs to have some drywall and insulation work done in her house. She has received a quote from a professional drywall contractor to complete her repairs for $1,200. Her neighbor Steve says he can complete the same job for $800. Sally could use a credit card to pay the contractor, but Steve can only accept cash. Sally’s credit card has a 14% APR for credit purchases and a 32% interest rate for cash advances. Expecting to pay $50 of the principle plus appropriate interest each month, Sally estimates that it would take her 24 months to pay off the contractor balance and 16 months to pay off the cash advance balance. In the end, would it be cheaper for Sally to hire the contractor or her neighbor to complete the repairs?

Robby is considering taking out a cash advance on his credit card to purchase a new television. His credit card offers cash advances up to $500.00 at an interest rate of 28% compounded monthly. If the television costs $350.00 and Robby plans to pay the balance of in 6 months, how much extra will he pay in interest to purchase the television? a. $29.14 b. $63.18 c. $174.48 d. $379.08 Please select the best answer from the choices provided