You are considering two ways of financing a spring break vacation. You could put it on your credit card, at 15% APR, compounded monthly, or borrow the money from your parents, who want an interest payment of 8% every six months. Which is the lower rate? (Note: Be careful not to round any intermediate steps less than six decimal places.) The effective annual rate for your credit card is %. (Round to two decimal places.) The effective annual rate for the loan from your parents is %. (Round to two decimal places.) The option with the lower effective annual rate is V.(Select from drop-down menu.)

You are considering two ways of financing a spring break vacation. You could put it on your credit card, at 15% APR, compounded monthly, or borrow the money from your parents, who want an interest payment of 8% every six months. Which is the lower rate? (Note: Be careful not to round any intermediate steps less than six decimal places.) The effective annual rate for your credit card is %. (Round to two decimal places.) The effective annual rate for the loan from your parents is %. (Round to two decimal places.) The option with the lower effective annual rate is V.(Select from drop-down menu.)

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 32P

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You are considering two ways of financing a spring break vacation. You could put it on your credit card, at 12% APR, compounded monthly, or borrow the money from your parents, who want an interest payment of 10% every six months. Which is the lower rate? (Note: Be careful not to round any intermediate steps less than six decimal places.) The effective annual rate for your credit card is _____%. (Round to two decimal places.) The effective annual rate for the loan from your parents is _____%. (Round to two decimal places.) The option with the lower effective annual rate is (your credit card/the loan from your parents). (Select from the drop-down menu.)
You are considering two ways of financing a spring break vacation. You could put it on your credit card, at 14% APR, compounded monthly, or borrow the money from your parents, who want an interest payment of 10% every six months. Which is the lower rate? (Note: Be careful not to round any intermediate steps less than six decimal places.)
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