Present Value of an Annuity Carrie and Miranda Earn the Same

question 14

Essay

Present Value of an Annuity Carrie and Miranda earn the same salary.However,Miranda has been far more financially responsible.She pays her bills on time and pays off her credit card debt quickly.Carrie had been less financially responsible.She often buys too many shoes and has allowed her credit card balance to balloon.If she is short on cash for a month,she simply decides to not even pay the minimum balance due on her credit card.Now they both are looking to buy apartments.Miranda decides she can afford to make $2,500 payments,but Carrie can only make $2,000 payments and pay off her credit card debt,too.Miranda qualifies for a 6.5 percent,30-year mortgage,but because of her bad credit rating Carrie will be charged 8 percent on a 30-year mortgage.Both will put 20 percent down.How is Carrie's bad credit going to impact her apartment search?

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Definitions:

Percent Method

A calculation method involving the use of percentages, often applied in finance, statistics, or to determine changes and allocations.

Behaviourally Anchored

A method of rating performance that involves evaluating specific examples of an employee's behavior against predefined anchors or benchmarks.

Subjective

Relating to personal opinions, interpretations, or feelings rather than to objective facts or evidence.

Traits Methods

A series of techniques used in performance evaluations focusing on the individual characteristics and attributes of employees rather than solely on output.