Jeremy Has a Number of Outstanding Credit Cards Debts

question 45

Multiple Choice

Jeremy has a number of outstanding credit cards debts. He seeks help from BDO to consolidate his debts and make it easy for him to make the debt payments. BDO offers him two alternatives. In the first alternative, the debt can be settled by making a payment of $30 000 now and a final payment of $42 000 in 3 years. Alternatively, the obligation can be settled by payments of $8400 at the end of every three months for three years. Which alternative is preferred if the interest is 8.5% compounded quarterly.

• A) Alternative 1
• B) Alternative 2
• C) Neither Alternative
• D) Don't take offer from the BDO
• E) Alternative 1 or Alternative 2, as both are essentially same

---

Definitions:

Depression

A common and serious mood disorder characterized by persistent feelings of sadness, hopelessness, and loss of interest, often accompanied by physical symptoms.

Addiction

Addiction is a psychological and physical inability to stop consuming a chemical, drug, activity, or substance, even though it is causing psychological and physical harm.

Brain Areas

Specific regions within the brain specialized for distinct cognitive or physiological functions.

Motivation

The driving force or reason behind an individual's actions, desires, and needs.