Answers2027 Ignite Financial Literacy-Personal Finance - EL3403The Cost of Credit

The Cost of Credit Answers

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Vera has a June credit card balance of $476.09. Her payment due date is June 27th, with a grace period of 5 days. If her payment is late, the credit card company charges a $30 late fee. Vera wants to pay the full amount to have a zero balance. How much should she pay if her online payment is processed on July 6th?$

Answer:

$506.09

2
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Kanya has a credit card that gives a 6% discount on every purchase and free shipping when used online. The annual percentage rate on the credit card is 12%. Kanya wants to buy a laptop that costs $420. Which statement about the cost of the laptop is true?

I
If Kanya uses the credit card and pays the full balance during the billing cycle, she will spend $25.20 more than paying cash for the laptop.
I
If Kanya uses the credit card and pays the full balance during the billing cycle, she will spend $50.40 more than paying cash for the laptop.
I
If Kanya uses the credit card and pays the full balance during the billing cycle, she will spend $50.40 less than paying cash for the laptop.
I
If Kanya uses the credit card and pays the full balance during the billing cycle, she will spend $25.20 less than paying cash for the laptop.
3

Which is a desirable characteristic to look for when choosing a credit card?

A
no grace period
B
low down payment
C
no annual fee
D
high interest rate
4

The table shows a schedule of Igor’s payment plan for a used car. Igorr’s Payment Plan for the First Three YearsYearBalanceMonthly PaymentEnd of YearBalance1 $245.33 2 $245.33$8,831.883 $245.33 How much is Igor’s total closed-end credit for the car?

A
$11,775.84
B
$14,719.80
C
$23,551.68
D
$26,495.64
5

Caitlyn has a credit card with a spending limit of $1500 and an APR (annual percentage rate) of 18%. During the first month, Caitlyn charged $375 and paid $250 of that in her billing cycle. Which expression will find the amount of interest Caitlyn will be charged after the first month?

Question illustration
A
Option
Option A
B
Option
Option B
C
Option
Option C
D
Option
Option D
6

Mo has a credit card that gives a 3% discount on every purchase. The annual percentage rate on the card is 12%. He is purchasing an electronic reader for $140. Check all that apply.

A
If Mo uses the credit card and pays the full balance during the billing cycle, the cost of the purchase will be $140.
B
If Mo pays cash, the cost of the purchase will be $140.
C
If Mo uses the credit card and pays off the balance at $30 a month for 7 months with no late fees, the cost of the purchase will be $143.34.
D
If Mo pays cash, the cost of the purchase will be $135.80.
E
If Mo uses the credit card and pays off the balance at $20 a month for 7 months with no late fees, the cost of the purchase will be $139.89.
F
If Mo uses the credit card and pays the full balance during the billing cycle, the cost of the purchase will be $135.80.
7

Open-end credit is

a
a loan given for a short period of time that is not dependent on credit history.
p
pledged to a company as security for a loan repayment.
a
an amount of time during which a loan can be repaid without interest.
a
an agreement with an institution on a certain amount that can be repeatedly borrowed.
8

Tran has a credit card with a spending limit of $2000 and an APR (annual percentage rate) of 12%. During the first month, Tran charged $450 and paid $150 of that in his billing cycle. Which expression will find the amount of interest Tran will be charged after the first month?

A
(0.01) (300 dollars)
Option A
B
(0.01) (450 dollars)
Option B
C
(0.12) (300 dollars)
Option C
D
(0.12) (450 dollars)
Option D
9

The table shows a schedule of Evita’s payment plan for a used car. Evita’s Payment Plan for the First Three YearsYearBalanceMonthly PaymentEnd of YearBalance1 $356.82 2 $356.82 3 $356.82$8,563.39Evita paid $2,408.91 in interest. What was the selling price of the car?

$
$12,845.52
$
$17,127.07
$
$19,000.00
$
$21,408.91
10

What is easy-access credit?

A
credit that is to be repaid in full by a specific date
B
a loan given for a short period of time that is not dependent on credit history
C
the amount of money borrowed excluding accrued interest
D
an amount of time during which a loan can be repaid without interest

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