MM255 Business Math and Statistical Measures

Unit 5: Instructor Graded Assignment Consumer Credit In this and future Instructor Graded Assignments you will be asked to use the answers you found in the Unit 1 Assignment. Note: For these questions you need to cite a reliable source for information, which means you cannot use sites like Wikipedia, Ask.com, and Yahoo answers. If you do use those sites the instructor may award 0 points for your response. The Assignment problems must have the work shown at all times. The steps for solving the problems must be explained. Failure to do so could result in your submission being given a 0. If you have any questions about how much work to show, please contact your instructor. Assignments must be submitted as a Microsoft Word document and uploaded to the Dropbox for Unit 5. Please type all answers directly in this Assignment below the question it applies to. All Assignments are due by Tuesday at 11:59 PM ET of the assigned Unit. Note: All interest rates are to be assumed to be yearly interest rates. For this assignment you will need the prime interest rate, as posted in the Wall Street Journal. Use the Internet to search for the current prime interest rate. List the current prime interest rate:_______________ Question 1 (5 points) 1. You have a credit card that is charging you 9.9% + the current prime rate. What is that interest rate on the credit card today? 1. Current Prime lending rate is 3.25% hence interest rate on credit card is 3.25+9.9=13.15%

Question 2 (5 points) 2. If this same card were issued 30 years ago, what would your interest rate be? In the event that there were multiple prime interest rates for a year, use the one that is 30 years from the day your class started. Use the Internet to determine what this rate is. Prime lending rate in 1983 was 11% hence interest rate on credit card is 11+9.9=20.9% Question 3: (20 points)

MM255 Business Math and Statistical Measures

3. In the month of April, your credit card (which is charging you 9.9% + the current prime interest rate) has a balance of $1000. On April 3rd you charge $100, then on April 20th you put 15 gallons of gas on the card. On April 23rd your payment of $400 arrives and is posted to your account. Finally, on April 27th you charge all of your food for the month for your family of 4. a) What is your average daily balance at the end of the month on this card? Hint: You will need to research and find the cost of gas and food in order to solve this. Use the national average as of four months before the date Assignment is due. For instance, if your Assignment is due November 3rd, 2012, use the July 2012 national average. Considering the opening balance and other transactions in the credit card and gas expense of 53 and food expense of 200 average daily balance is 1032 on the credit card.

b) How much interest will your card charge you this month, assuming interest is charged on the average daily balance? Interest cost will be 11.3 (Average daily balance * Interest Rate / 12)

c) If this card were using the interest rates of 30 years ago, how much interest would your card charge you this month? Interest cost as 30 year prior interest rate would be 17.95 (Average daily balance Interest Rate of 1983 / 12) Essay (15 points) 5. Search for a consumer research site such as: Source: Bankrate.com (n. d.). Retrieved from http://www.bankrate.com Research and find three credit cards offered by three different companies. Write an essay on which credit card is the best and why you think it is the best. In your essay look at things like the interest rate, grace period, annual fees and compare those between the cards, but in the end you must make a decision on which card you like best and why. (Note: Professors are free to pick three cards for you to research if they wish, please check with your teacher for specific requirements on this question). Requirements Write your essay in this document do not save it in a separate file. You must clearly state your position with well-structured paragraphs using proper grammar, spelling, and sentence structure. This is not an opinion question you must offer evidence to support your position, using properly cited sources. Your answer must be between -1 page in length.

MM255 Business Math and Statistical Measures

You must cite and reference at least one source (book, website, periodical) using APA format. Do not use unreliable sources such as Wikipedia, and Yahoo! Answers.

You may submit your Assignments to the Math Center for review. Tutors will not grade or correct the Assignment, but they will provide guidance for improvement. Tutors will not, however, help you find web sites for the Assignment. Be sure to submit Assignments early enough to receive feedback and make corrections before the Assignment due date (24 hour turn-around times Monday-Thursday and 48 hour turn-around times on weekends are typical). Email Assignments to: kumc@kaplan.edu. Please put MM255 Assignment Review in the subject line of the message.