Lewis Had a Minimum Payment of $87 Due on March

question 35

Multiple Choice

Lewis had a minimum payment of $87 due on March 12 for one of his credit cards.He was unable to send the payment until March 31,at which time he sent $100.With his next credit card statement,Lewis received notification that,because of his late payment,his interest rate on his outstanding balance would be increasing from its normal 14.99% to the default rate of 27.99%.His credit card company:

• A) has the right to increase his interest rate because of the late payment.
• B) violated the Credit Card Act of 2009.
• C) may not increase his interest rate on outstanding balances unless Lewis is more than 60 days late in making his minimum payment.
• D) may not increase his interest rate on outstanding balances because Lewis sent more than his minimum payment for March.
• E) Both (b) and (c).

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Definitions:

Profitability Index (PI)

The present value of an investment’s future cash flows divided by its initial cost; also benefit/cost ratio.

Straight-Line Depreciation

A framework for spreading out the cost of a physical asset across its useful lifespan in identical yearly contributions.

Mutually Exclusive

Mutually exclusive is a statistical term describing two or more events that cannot occur simultaneously, often used in decision making or project selection scenarios.

Internal Rate of Return (IRR)

The Internal Rate of Return (IRR) is a financial metric used to evaluate the profitability of potential investments by calculating the discount rate that makes the net present value of all cash flows from the investment equal to zero.