Randy and Rhoda just got married and found their dream home….

Randy and Rhoda just got married and found their dream home. They will need to take out a loan of $96,000 to pay for the home, as they have a $24,000 down payment. Randy and Rhoda qualify for their loan at 4% for 30 years. Randy and Rhoda have the opportunity to purchase 2 points to lower their interest rate to 2%.   How much will they save in interest by paying for points?

In June, Jake and Jill sign up for an American Express credi…

In June, Jake and Jill sign up for an American Express credit card which has the following terms: Interest rate = 19% (compounded daily) Statement Cycle = June 15th – July 14th Grace Period = 22 days (bill due on 5th of the following month) Minimum payment = Greater of $25 or 2% statement balance Late fee = $35 On July 3, Jake and Jill make their only purchase with the card (new furniture for $1,200). They are struggling to understand how credit cards work. Help them answer the following three questions.   What is the minimum payment that Jake and Jill owe on August 5?

Randy and Rhoda just got married and found their dream home….

Randy and Rhoda just got married and found their dream home. They will need to take out a loan of $96,000 to pay for the home, as they have a $24,000 down payment. Randy and Rhoda qualify for their loan at 4% for 30 years. Randy and Rhoda have the opportunity to purchase 2 points to lower their interest rate to 2%.   How long will it take them to break even?