7. A bank charges 1 1/21 per month on the unpaid balance for purchases made with

Question

7. A bank charges 1 1/21 per month on the unpaid balance for purchases made with the credit card. This is equivalent to what effective annual interest rate? (a) 1.53 (b) 123 (c) 183 (d) 19.53 (e) 394 8. An annuity" is defined as (a) Earned interest due at the end of each interest period. (b) Cost of producing a product or rendering a service. (c) Total annual overhead. assigned to a unit of production. (a) Amount of interest earned by a unit of principal in a unit of time. (e) A series of equal payments occurring at equal periods of time. 9. An individual wishes to deposit a certain quantity of money now so that at the end of five years he will have $500. With interest at 43 per year, compounded semiannually, how much must he deposit now? (a) $340.30 (b) 400.00 (c) 416.95 (d) 410.15 10. The present worth of an obligation of $10,000 due in 10 years if money is worth 9t is nearest to (a) $10,000 (b) 9,000 (c) 7,500 6,000 (d) (e) 4,500 11. $1000 is borrowed for one year at an rate of 1t per month. this same sum of money is borrowed for the same period at an interest rate of 12t per annum, the savings in interest charges would be: (a) $0 (b) 3 (c) (d) i4

Explanation / Answer

7) If a bank charges 1.5% p.m for the unpaid balance of purchases made by credit cards, then it is actually charging 18% per annum.

Hence option C is correct option.

8) An annuity is "a fixed sum of money paid to someone each year, typically for the rest of their life."

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