Answer:
1.purchase of car
2.pay as much as possible toward the debt at the beginning of the month
3.$16.03 saved
4.$2.81 is lost
Step-by-step explanation:
1.
By definition of debt which is money owed then credit cards and student loans come under debt.
So between buying a car or a house, as houses are more expensive than cars hence, the correct answer is purchase of car.
Debt is usually expected in any of the following cases except purchasing of car.
2.
To reduce the interest on debts the most suitable option is to pay as much as you can at the beginning of the month.
Hence most suitable option is pay as much as possible toward the debt at the beginning of the month.
3.
Money owed=1350
Payment at the beginning of the month=300
Finding monthly rate:
14.25% / 12 = 1.1875%
if payment made at the beginning of the month:
1350 -300= 1050
if payment made at the end of the month
1350+ (1350*1.1875%)-300= 1,066.03
So interest saved by paying at the beginning of the month versus
1066.03-1050=16.03.
2)
Finding monthly rate:
(3%/12)= 0.25%
$300 in a savings account earning 3% APR:
300*(0.25%) = $0.75 earned in one month.
$300 on a credit card at an APR of 14.25%:
300*(1.1875%) = $3.56 costed in one month.
So if $3.56 is spent on the credit card to get $0.75 in savings account then $2.81 is lost!
