(a) Suppose a credit card company charges a monthly interest rate of 1.8%. What APR must the company report? (Round your answer to the nearest tenth of a percent.) % (b) The phrase annual percentage rate leads some to believe that if you borrow $5000 from a credit card company which quotes an APR of 21.6%, and if no payments are made, then at the end of 1 year interest would be calculated at 21.6% simple interest on $5000. How much would you owe at the end of a year if interest is calculated in this way? (Round your answer to the nearest cent.) $ (c) If interest is compounded monthly (which is common), then the actual amount you would owe in the situation of part (b) is given by $5000 ✕ 1.01812. What is the actual amount you would owe at the end of the year? (Round your answer to the nearest cent.) $
(a) Suppose a credit card company charges a monthly interest rate of 1.8%. What APR must the company report? (Round your answer to the nearest tenth of a percent.) % (b) The phrase annual percentage rate leads some to believe that if you borrow $5000 from a credit card company which quotes an APR of 21.6%, and if no payments are made, then at the end of 1 year interest would be calculated at 21.6% simple interest on $5000. How much would you owe at the end of a year if interest is calculated in this way? (Round your answer to the nearest cent.) $ (c) If interest is compounded monthly (which is common), then the actual amount you would owe in the situation of part (b) is given by $5000 ✕ 1.01812. What is the actual amount you would owe at the end of the year? (Round your answer to the nearest cent.) $
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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Many lending agencies
(a) Suppose a credit card company charges a monthly interest rate of 1.8%. What APR must the company report? (Round your answer to the nearest tenth of a percent.)
%
(b) The phrase annual percentage rate leads some to believe that if you borrow $5000 from a credit card company which quotes an APR of 21.6%, and if no payments are made, then at the end of 1 year interest would be calculated at 21.6% simple interest on $5000. How much would you owe at the end of a year if interest is calculated in this way? (Round your answer to the nearest cent.)
$
(c) If interest is compounded monthly (which is common), then the actual amount you would owe in the situation of part (b) is given by $5000 ✕ 1.01812. What is the actual amount you would owe at the end of the year? (Round your answer to the nearest cent.)
$
%
(b) The phrase annual percentage rate leads some to believe that if you borrow $5000 from a credit card company which quotes an APR of 21.6%, and if no payments are made, then at the end of 1 year interest would be calculated at 21.6% simple interest on $5000. How much would you owe at the end of a year if interest is calculated in this way? (Round your answer to the nearest cent.)
$
(c) If interest is compounded monthly (which is common), then the actual amount you would owe in the situation of part (b) is given by $5000 ✕ 1.01812. What is the actual amount you would owe at the end of the year? (Round your answer to the nearest cent.)
$
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