MGCR 341 Quiz: Tutorial-Problems-I
16 Oct 2015
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Capital one is advertising a 60-month, 5. 99% apr compounded monthly motorcycle loan. Using the formula for computing a loan payment we calculate the monthly. You have credit card debt of . 000 that has an apr (monthly compounding) of 15%. Each month you pay the minimum monthly payment only and you are required to pay only the outstanding interest. You have received an offer in the mail for an otherwise identical credit card with an apr (monthly compounding) of 12%. After considering all your alternatives, you decide to switch cards, roll over the outstanding balance on the old card into the new card and borrow additional money as well. The discount rate on the original card is. Assuming that your current monthly payment is the interest that accrues, it equals: This is a perpetuity so the amount you can borrow at the new interest rate is this cash flow discounted at the new discount rate.
