Test — Test Answers

Fran is going to transfer her credit card balance over to a new card. She has an existing balance of $752.69. Her current card charges her a transfer fee of 12.5%, added to her balance, for transferring her debt. The new card has an opening fee of $50, which is also added to her balance. She will also have to make an immediate minimum payment, which is 3.35% of her total balance. How much will her balance be after she makes this payment, assuming that she pays the minimum amount? Round all dollar values to the nearest cent.

Pam has just moved into a new home and wants to purchase an oven. She expects to live in this house for the foreseeable future. She has narrowed her choices down to two options. Consider the following table, which describes the prices, daily electricity costs, and lifespans of the two ovens she is considering: Brand Brand U Brand V Price $2,250 $725 Avg. Cost/Day $0.16 $0.28 Lifespan 24 years 8 years Which brand will have the lower lifetime cost, and how much lower will it be? Hints: If the product's expected lifespans differ, assume that repurchase(s) at the same price is possible to equalize the lifespans. Remember that six of the twenty-four years will be leap years, and round all dollar values to the nearest cent.

Dennis has a credit card with an APR of 10.14% and a billing cycle of 30 days. The following table shows his transactions with that credit card in the month of November.DateAmount ($)Transaction11/1517.87Beginning balance11/931.63Purchase11/2364.10Purchase11/2665.75PaymentIf the finance charge for November is $3.82, which method of calculating the finance charge does Dennis’s credit card company use?

Of the following statements, which one or ones describe actions harmful to your credit score?I. Owing a lot of moneyII. Having many lines of creditIII. Making steady payments

Marilyn has two credit cards, D and E. Card D has a balance of $691.64, and Card E has a balance of $1,014.22. The minimum monthly payment on Card D is 3.57% of the total balance, and the minimum monthly payment on Card E is 2.51% of the total balance. How much greater is the minimum payment on Card E than on Card D?

Adam’s credit card calculates finance charges using the adjusted balance method and a 30-day billing cycle. The table below shows his use of that credit card over three months.DateAmount ($)Transaction4/1626.45Beginning balance4/1037.41Purchase4/1244.50Purchase5/365.50Payment5/1624.89Purchase5/20104.77Payment6/623.60Payment6/1015.00Purchase6/1451.85PurchaseIf Adam’s credit card has an APR of 14.63%, what is Adam’s balance at the end of June?

Looking for some furniture for her new apartment, Susan visits the local swap meet in search of something cheap. Knowing that most swap meet vendors will not accept credit cards and that she will not have any money until her next payday, Susan decides to take out a $200 cash advance on her credit card at an interest rate of 32%.If Susan had no previous balance on her credit card, and she manages to pay off the balance within 1 month, how much will she have to pay in interest?

Eric is comparing the credit scores of his friends. The scores he gathered are found in the table below. 588838691818846725605732750Among this batch of credit scores, find whether the mean or the median is higher, and how much higher it is. (Round to the nearest whole point, if applicable.)

From the statements below, identify the way or ways in which making only minimum monthly payments on a long-term credit purchase can be a disadvantage.I. It is illegal to make only the minimum payments for more than one year.II. Repeatedly making minimum payments harms your credit score.III. The total cost is higher if the length of the debt is longer.

Miles and Nick each separately apply for and receive loans worth $5,000 apiece. Miles has a very good credit score, so his loan has an APR of 7.75%, compounded monthly. Nick’s credit score is rather low, so his loan has an APR of 13.10% interest, compounded monthly. If both of them repay their loans over a four year period, making equal monthly payments based on their own loan, how much more will Nick have paid than Miles? (Round all dollar values to the nearest cent.)

Which of the following types of credits would best describe credit cards?

Describe the effect an increase in i, the interest rate applied to the present value, has on the monthly payment P in the formula

Tim has four credit cards with the balances and APRs listed in the chart below. What will Tim's total monthly minimum credit card payment need to be to pay off all four credit cards in 24 months?Credit CardBalanceAPRA$1,260.0012%B$900.0018%C$1,290.009%D$1,200.0016%

Gregory has a credit card with a 30-day billing cycle and an APR of 11.95%. The following table shows Gregory’s credit card transactions for the month of April.DateAmount ($)Transaction4/1622.82Beginning balance4/445.45Payment4/1078.91Purchase4/2516.36PurchaseBetween the adjusted balance method and the daily balance method, which method of computing Gregory’s April finance charge will result in a greater finance charge, and how much greater will it be?

Patrick has a credit card with an APR of 15.40% and a billing cycle of 30 days. The following table shows Patrick’s credit card transactions in the month of August.DateAmount ($)Transaction8/11,466.22Beginning balance8/628.48Purchase8/9150.00Payment8/17115.75Payment8/2040.00Purchase8/2231.76PurchaseHow much greater will Patrick’s August finance charge be if his credit card company computes finance charges using the previous balance method than if it computes finance charges using the adjusted balance method?

Tom is in dire need of a new washing machine. He knows what model he would like to get, but doesn't have the cash to pay for it. He plans to get a line of credit (credit card) at the store when he purchases his new washer. He found four different stores that carry the same washing machine for different prices. The lines of credit they offer also come with different APRs. Tom's primary goal is to minimize his monthly payment as he pays the washing machine off over the next 18 months. From which of the four stores should Tom purchase his washing machine? StorePrice ($)Credit Card APRBob's Nuts and Bolts$450.0021%Steve's Scratch and Dent$405.0022%Wally's Washing Machines$432.0019%Al's Appliances$475.0016%

Abby has a credit card which uses the adjusted balance method to compute finance charges. Her card has an APR of 11.83%, and she is on a 30-day billing cycle. The table below shows her transactions in the month of January.DateAmount ($)Transaction1/1722.10Beginning balance1/618.12Purchase1/765.00Payment1/1418.00Purchase1/2044.79Purchase1/2334.25Purchase1/2740.00PaymentWhat will Abby’s January finance charge be?

Jessica’s credit card is on a 30-day billing cycle, and it computes finance charges using the adjusted balance method. The following table details Jessica’s use of her credit card in the month of October.DateAmount ($)Transaction10/11,240.55Beginning balance10/236.43Purchase10/1075.00Payment10/13131.79Payment10/2041.52Purchase10/2225.00PurchaseWhat is Jessica’s adjusted balance for October?

Which of these is not a method used to calculate finance charges?

Natasha had a $922.93 balance on her credit card at the beginning of September. Her credit card has an APR of 9.89%, compounded monthly, and a minimum monthly payment of 3.08% of the total balance. The following table shows Natasha’s credit card purchases over the next two months. Month Cost ($) September 33.70 October 61.70 October 27.80 If Natasha makes only the minimum payments, what will her balance at the beginning of November? (Assume that the interest accrues before the monthly payment, and that the monthly payment occurs at the end of the month. Round all dollar values to the nearest cent.)