Finc 2400 Chapter 8 Study Guide Graded A+

The ________ method charges interest based on the balance at the beginning of the new billing period. A) new cycle B) adjusted balance C) average daily balance D) previous balance {Ans: D}What is the interest cost and the total amount due on a six-month loan of $1,500 at 13.2% simple annual interest? A) $99; $1,500 B) $99; $1,599 C) $198; $1,698 D) $198; $1,500 {Ans: Answer: B Explanation: B) $1,500 × .132 × 6/12 = $99; $1,500 + $99 = $1,599}You are considering applying for one of two credit cards. Credit card "A" has an annual fee of $30 and charges interest of 10%. Credit card "B" has no annual fee, but charges an interest rate of 15%. If you carry an average balance of $500 on your credit card, the lowest total annual expenses you could have with one of these two credit cards would be A) $50. B) $80. C) $75. D) $90. {Ans: Answer: C Explanation: C) Card "A" $500 × 0.10 = $50 + $30 = $80 Card "B" $500 × 0.15 = $75}If you find yourself with an excessive credit card balance, the first thing you should do is A) borrow funds