Can you complete parts a through d for me? A person borrows $2,850 on a bank credit card at a nominal rate of 18% per year, which is actually charged at a rate of 1.5% per month.(a) What is the annual percentage yield (APY) for the card? (Round your answer to one decimal place.)%(b) Assume that the person does not place any additional charges on the card and pays the bank $150 each month to pay off the loan. Let B, be the balance owed on thecard after n months. Find an explicit formula for B,.(c)How many months will be required to pay off the debt? (Round your answer up to the nearest whole number.)months(d) What is the total amount of money the person will have paid for the loan?2$

a. Annual Percentage Yield APY =[ (1+r)^n - 1] APY = [(1+0.015)^12-1] APY…

person borrows $2,850 on a bank credit card at a nominal rate of 18% per year, which is actually charged at a rate of 1.5% per month. a) What is the annual percentage yield (APY) for the card? (Round your answer to one decimal place.) %

person borrows $2,850 on a bank credit card at a nominal rate of 18% per year, which is actually charged at a rate of 1.5% per month. a) What is the annual percentage yield (APY) for the card? (Round your answer to one decimal place.) %

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 19P

See similar textbooks

Related questions

Q: A loan of $1000 is paid off in 12 monthly payments of $120 each. What is the effective annual…

A: Borrowings are the liability that is used to finance the requirement of the funds. The borrower…

Q: A bank offers a loan that will require you to pay 9% per annum with semi-annual compounding. Which…

A: Given rate, 9% semi annual compounding

Q: A person borrows $3,000 on a bank credit card at a nominal rate of 18% per year, which is actually…

A: Loan is the value which is borrowed from the other sources like banks and this amount repaid later…

Q: ARAB Bank pays 0.074 percent, compounded weekly (based on 52 weeks), on an 8-month certificate of…

A: The effective annual rate of interest is the real return on the savings account when the effects of…

Q: ARAB Bank pays 0.07 percent, compounded weekly (based on 52 weeks), on an 8-month certificate of…

A: The future value of the cash flow is the future worth of a cash flow at a certain rate of interest…

Q: A bank is offering a loan of $20,000 with an interest rate of 9%, payable with monthly payments over…

A: Monthly payment refers to the amount of money payable every month by the borrower to the lender of…

Q: pays a 9.75% nominal rate on deposits, with monthly compounding. What effective annual rate (EFF%)…

A: The effective annual rate can be computed as follows :- EAR = (1+i / x)^x - 1 = (1 + 0.0975/12)^12…

Q: Elliott Credit Corp. wants to earn an effective annual return on its consumer loans of 17.1 percent…

Q: Suppose you have received a credit card offerfrom a bank that charges interest at 1.4% per…

A: Working note:

Q: To establish a "rainy day" cash reserve account, a certain company deposits $12,000 of its profit at…

A: The question is based on the concept of Annuity.

Q: Vandermark Credit Corp. wants to earn an effective annual return on its consumer loans of 15.25…

A: Effective annual rate = [1+Annual Rate/365]^365 - 1

Q: Today is July 1 and Hilda Company will need a fixed interest rate loan of P1,200,000 for 6 months…

A: The investors will invest to earn profits from the investment. The investment can be made in shares,…

Q: bank is offering aloan of $25,000 with a nominal interest rate of 18% compoundedmonthly, payable in…

A: Loan amount (PV) = $ 25000 Annual interest rate = 18% Monthly interest rate (r) = 18%/12 = 1.50%…

Q: First City Bank pays 6 percent simple interest on its savings account balances, whereas Second City…

A: Simple interest is the additional amount that the bank pays for depositing a sum in the account. In…

Q: Flat Rock Inc recently borrowed $55,000 from its bank at a simple interest rate of 9.2%. The loan is…

A: The loan agreement that states the interest amount would be added back to the amount borrowed, such…

Q: If you borrow $7,500 at $550 interest for one year, what is your effective interest rate for the…

A: The effective rate of interest refers to the return on savings or interest on the investment…

Q: Straight bank loan. Right Bank offers EAR loans of 8.74% and requires a monthly payment on all…

A: APR is termed as the Annual Percentage Rate which is charged by any of the authorizing institutions…

Q: A firm sells its accounts receivables to a factor at a 3.5% discount. The average collection period…

A: Average collection period = 3 months Discount = 3.5% Receivables Turnover = 12months / Average…

Q: Today is July 1 and Barow Company will need a fixed interest rate loan of P1,200,000 for 6 months…

A: A fixed interest loan rate is a rate in which interest rate did not fluctuate for the period of…

Q: Bank A offers a nominal annual interest rate of 5% compounded daily, while Bank B offers continuous…

A: Here, Bank A: Annual Interest rate = 5% No. of Compounding Periods = 365 days Present value of…

Q: Suppose you have a Visa credit card and pay a 20 percent annual fina charge (1.67 percent per month)…

A: The credit card charges interest on average daily balance and finance charges on based on month on…

Q: Bank America offers a stated annual interest rate of 5.0 percent, compounded quarterly, while Bank…

A: Bank America = 5% interest Bank USA= 5.10% interest Assume Present value $100

Q: XYZ Bank pays simple interest of 2% with quarterly compounding for deposits in their savings…

A: LIFO method is also called Last -In first out method. Under this method money that is deposited at a…

Q: Bank America offers a stated annual interest rate of 5.0 percent, compounded quarterly, while Bank…

A: Given data; Bank America interest rate = 5% compounding frequency by Bank America = quarterly Bank…

Q: Assume that a bank has lent a firm a P 200,000 for 60 days at 10% interest. The loan is discounted,…

A: Principal amount (P) = P 200,000 Interest for 60 days (I) = P200,000 x 10% x 60/360 days = P3,333…

Q: New Town Bank offers you a line of credit of $50,000 with an interest rate of 2.1 percent per…

A: Effective Annual interest rate(EAR) refers to the actual interest rate which is received on deposits…

Q: If you borrow S20 000 as a five-year loan from the bank and the bank requires you to make…

Q: A firm sells its accounts receivables to a factor at a 1.7% discount. The average collection period…

A: Effective annual interest rate formula: effective annual interest rate =1+rnn-1where,r=discount…

Q: New Town Bank offers you a line of credit of $50,000 with an interest rate of 2.1 percent per…

A: An investor invests in specific securities in order to get some returns, the actual rate of return…

Q: you make 11 semi annual deposits of 550 pesos into a savings account the interest rate is 4.72%…

A: Interest rate=4.72% compounded quarterly Interest rate per quarter=4.72%4=1.18% Interest rate per…

Q: Straight bank loan. Left Bank has a standing rate of 7.9% (APR) for all bank loans and requires…

A: As you have posted multiple questions, we will solve the first question for you. To get remaining…

Q: Prescott Bank offers you a five-year loan for $54,000 at an annual interest rate of 7.5 percent.…

A: The annual loan payment is the regular installment of the total loan, which repays at a regular…

Q: A bank offers a lending rate of 10% p.a. compounded quarterly. What figure would they quote if they…

A: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…

Q: Prescott Bank offers you a five-year loan for $62,000 at an annual interest rate of 6.25 percent.…

A: Using excel PMT function

Q: A local bank is advertising that it pays depositors 6% compounded monthly, yielding an effective…

A: The present value is the value of the sum received at time 0 or the current period. It is the value…

Q: A credit card company charges an interest rate of 1.375% per month on the unpaid balance of all…

A: Effective rate of interest is the real return on savings or any interest paying investment when…

Q: You have just received an offer from a bank for a credit card with a quoted rate, or APR, of 18…

A: In the given question we need to compute the Effective annual rate (EAR).

Q: Ammer Products has an average accounts payable balance of P850,000 and its annual net credit…

A: Accounts payable in the business means accounts of those suppliers from whom business has made…

Q: To buy a Treasury bill (T-bill) that matures to $10,000 in 6 months, you must pay $9720. What annual…

A: future value = $10000 Mature time = 6 months or 6/12 Principal = $9720 interest amount = future…

Q: Elliott Credit Corp. wants to earn an effective annual return on its consumer loans of 14.2 percent…

A: given, EAR= 14.2%M = 365

Q: If a nine month term deposit at a bank earn a simple interest rate of 9% per annum, how much should…

A: Term deposit is a way in which the person locks his amount or we can say sum of money for a specific…

Q: The Bank gives an advertisement of 15% account that yields 15.56% annually. How often is the…

A: Bank Account Interest Rate = 15% Bank Account Yield = 15.56%

Q: The nominal interest rates for Zenith and HFC banks are quoted as follows: - Zenith bank pays…

A: Effective annual rate (EAR) : acctual interest rate taking the effect of compounding. EAR formula:…

Q: A tresury bill with a face value of 100,000 dollars and 120 days until maturity is selling for…

A: Discount yield of T-bill for a year is Discount yield =[(Face value-selling price)]*360/120

Q: Bank A offers a nominal annual interest rateof 6.5% compounded daily, while Bank B offerscontinuous…

A: The future value of the cash flow is the future worth of a cash flow at a certain rate of interest…

Question

Can you complete parts a through d for me?

A person borrows $2,850 on a bank credit card at a nominal rate of 18% per year, which is actually charged at a rate of 1.5% per month.
(a) What is the annual percentage yield (APY) for the card? (Round your answer to one decimal place.)
%
(b) Assume that the person does not place any additional charges on the card and pays the bank $150 each month to pay off the loan. Let B, be the balance owed on the
card after n months. Find an explicit formula for B,.
(c)
How many months will be required to pay off the debt? (Round your answer up to the nearest whole number.)
months
(d) What is the total amount of money the person will have paid for the loan?
2$

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

If Bergen Air Systems takes out a $100,000 loan, with eight equal principal payments due over the next eight years, how much will be accounted for as a current portion of a noncurrent note payable each year?
Cost of Bank Loan Mary Jones recently obtained an equipment loan from a local bank. The loan is for 15,000 with a nominal interest rate of 11%. However, this is an installment loan, so the bank also charges add-on interest. Mary must make monthly payments on the loan, and the loan is to be repaid in 1 year. What is the effective annual rate on the loan (assuming a 365-day year)?
Marathon Peanuts converts a $130,000 account payable into a short-term note payable, with an annual interest rate of 6%, and payable in four months. How much interest will Marathon Peanuts owe at the end of four months? A. $2,600 B. $7,800 C. $137,800 D. $132,600
Gifts Galore Inc. borrowed 1.5 million from National City Bank. The loan was made at a simple annual interest rate of 9% a year for 3 months. A 20% compensating balance requirement raised the effective interest rate. a. The nominal annual rate on the loan was 11.25%. What is the true effective rate? b. What would be the effective cost of the loan if the note required discount interest? c. What would be the nominal annual interest rate on the loan if the bank did not require a compensating balance but required repayment in three equal monthly installments?
A customer takes out a loan of $130,000 on January 1, with a maturity date of 36 months, and an annual interest rate of 11%. If 6 months have passed since note establishment, what would be the recorded interest figure at that time? A. $7,150 B. $65,000 C. $14,300 D. $2,383
Del Hawley, owner of Hawleys Hardware, is negotiating with First City Bank for a 1-year loan of 50,000. First City has offered Hawley the alternatives listed here. Calculate the effective annual interest rate for each alternative. Which alternative has the lowest effective annual interest rate? a. A 12% annual rate on a simple interest loan, with no compensating balance required and interest due at the end of the year b. A 9% annual rate on a simple interest loan, with a 20% compensating balance required and interest due at the end of the year c. An 8.75% annual rate on a discounted loan, with a 15% compensating balance d. Interest figured as 8% of the 50,000 amount, payable at the end of the year, but with the loan amount repayable in monthly installments during the year