Topic Test Answers

How can credit cards be safer than cash?

Roger has a credit card with an APR of 19.40% and a billing cycle of 30 days. The following table shows his transactions with that credit card in the month of June.DateAmount ($)Transaction6/1265.40Beginning balance6/690.00Payment6/1643.33Purchase6/2237.71PurchaseIf Roger’s finance charge for June is $3.56, which method of calculating the finance charge does Roger’s credit card company use?

Gary has a credit card with an APR of 13.57%, compounded monthly. He would like to pay off the $1,847.42 card balance over the course of two and a half years by making identical monthly payments. Assuming that he makes no additional purchases on his card, how much must Gary pay every month to reach his goal? (Round all dollar values to the nearest cent.)

Eileen just received her credit scores from the three major credit bureaus. Her Experian score is 824, her Equifax score is 840, and her TransUnion score is 832. What is the mode of Eileen’s credit scores? (Round to the nearest whole point, if necessary.)

Greg has a credit card which requires a minimum monthly payment of 2.06% of the total balance. His card has an APR of 11.45%, compounded monthly. At the beginning of May, Greg had a balance of $318.97 on his credit card. The following table shows his credit card purchases over the next few months. Month Cost ($) May 46.96 May 33.51 May 26.99 June 97.24 June 112.57 July 72.45 July 41.14 July 101.84 If Greg makes only the minimum monthly payment in May, June, and July, what will his total balance be after he makes the monthly payment for July? (Assume that interest is compounded before the monthly payment is made, and that the monthly payment is applied at the end of the month. Round all dollar values to the nearest cent.)

Melissa used her credit card to buy a $745 refrigerator. She kept the refrigerator for exactly nine years, during which time it consumed an average of $0.19 of electricity every day. Melissa’s credit card has an APR of 16.84%, compounded monthly. Melissa paid off her refrigerator by making identical monthly payments for four years. If she made no other purchases with her card, what percentage of the lifetime cost of the refrigerator did the electricity make up? (Assume that two of the years were leap years, and round all dollar values to the nearest cent.)

Gareth has just remodeled his kitchen and wants to buy one of two stand-alone freezers. Consider the following table, which displays the prices, electricity costs, and lifespans of the two freezers he is considering:BrandBrand RBrand SPrice$575$98Avg. Cost/Wk$3.17$4.54Lifespan10 years2 yearsNo matter which brand he chooses, Gareth will pay for the freezer on his credit card, which has an APR of 9.31%, compounded monthly. It takes Gareth eighteen months to pay off a Brand S freezer and four years to pay off a Brand R freezer. Assuming that Gareth makes no other purchases or payments with his credit card, over the next ten years, which brand of freezer will have a lower lifetime cost, and how much lower will it be? (Round all dollar values to the nearest cent.)

Hannah has a credit card with an APR of 11.90% and a billing cycle of 30 days. The following table shows Hannah’s transactions in the month of April. DateAmount ($)Transaction4/1322.95Beginning balance4/1019.87Purchase4/1450.00Payment4/1971.21PurchaseIf Hannah’s credit card company calculates finance charges using the daily balance method, what will her April finance charge be?