PFIN (with PFIN Online, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)
6th Edition
ISBN: 9781337117005
Author: Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher: Cengage Learning
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Chapter 7, Problem 1FPE
Summary Introduction
To discuss: The options available to person E and the way in which decrease the cost of borrowing and increase flexibility.
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A certified financial planner notes that with an unsubsidized student loan,
the borrower has the choice of whether to make interest payments on the loan while
still in college. She advises that making the interest payments rather than postponing
them until after graduation is "always to your financial benefit ... because otherwise
the interest payments will capitalize"
(a)
(b)
Why does she believe that making the payments would be to your fi-
nancial benefit? Are there good reasons some students decide to postpone making
the interest payments until after they graduate? Briefly explain.
What does the financial planner mean when noting that the interest
payments will "capitalize"?
REFLECTING
Should Jill
consider a payday
loan to purchase
the refrigerator?
Explain.
Hint
APR means annual
percent rate.
2. Jill is buying a new refrigerator. She cannot afford to pay
cash. Should she use a credit card or get a personal loan?
Justify your answer.
3. Liam, a taxi driver in Revelstoke,
wants to buy a new taxi. He was
approved for the loans in this chart.
a) What should Liam think about
when he chooses a loan?
should Choose the
Lost
Fixed
APR payments for
4 Apprenticeship and Workplace 11
secured
personal 5.5%
loan
auto loan
7.5%
b) Which loan should Liam choose? Explain why.
4 yr
6 yr
4. Hannah says that using payday loans and cash advances on
credit cards are bad choices for borrowing money. Do you
agree or disagree? Explain.
NEL
Scenario 2:Saving for collegeYou are a freshman in high school andhave your eye on a college degree. Butcollege is expensive, especially sincethe costs include tuition, food, livingexpenses, travel and books.What financial information do youneed?What financial decision-makingstrategies can you use?(Cost comparison, cost-benefitanalysis, calculating future expensesor budgeting?)
Chapter 7 Solutions
PFIN (with PFIN Online, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)
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- II. Case Application. Answer the following situations by applying what you have learned from the previous discussions. A customer says, "Insurance is a waste of money. If and when I suffer a financial loss because of an accident or some other event, I can pay for it from my savings account." As an insurance agent your primary goal is to change this kind of mindset, how would you persuade this person to purchase insurance? Design a strategy. At 30, Alyssa Valdez invested P50,000 in a time deposit which earns 3% per annum. With the same interest rate, how much would her earnings be at age 35 if she reinvests the interest with the principal. Show your solutionarrow_forward(Solving for r with annuities) Nicki Johnson, a sophomore mechanical engineering student, receives a call from an insurance agent, who believes that Nicki is an older woman ready to retire from teaching. He talks to her about several annuities that she could buy that would guarantee her an annual fixed income. The annuities are as follows If Nicki could earn 11 percent on her money by placing it in a savings account, should she place it instead in any of the annuities? Which ones, if any? Why? a. What rate of return could Nicki earn on her money if she place it in annuity A with $6500 payment per year and 16 years duration?arrow_forwardRead the passage and answer the following question(s). dis ins Homeowner and Renters Insurance: Protect Your Belongings You may be able to save hundreds of dollars a year on homeowners insurance by shopping around. You can also save money with these tips: Consider a higher deductible. Increasing your deductible by just a few hundred dollars can make a big difference in your premium. Ask your insurance agent about discourks. You may be able to get a lower premium if your home has safety features such as dead-bolt locks, smoke detectors, an alarm system, storm shutters or fire retardant roofing material. Persons over 55 years of age or long-term customers may also be offered discounts. OD. Insure your house NOT the land under it. After a disaster, the land is still there. If you don't subtract the value of the land when deciding how much homeowners insurance to buy, you will pay more than you should. Don't wait till vou have lorarrow_forward
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