Reference no: EM132966210

Briar is planning to apply for a new credit card and is considering the following three choices. They are also planning to buy a $800 big screen television and plans to pay for this over a two-year period by making equal monthly payments.

Credit Card

                                                 Annual Interest Rate       Annual Fee

MBNA True Line Master Card              8.99%                $39

CIBC Select VISA Card                    13.99%                 $29

American Express Essential Credit Card   12.99%                $0

Problem 1: How much in total financing costs (interest costs and annual fees) for the American Express Essential Credit Card over the 2-year period (Hint: Total Financing Costs = Total Interest Costs + Total Annual Fees)?

Option 1: $109.16

Option 2: $111.94

Option 3: $100.54

Option 4: $110.45

Option 5: $112.71

Problem 2: Based on your above calculations, which credit card should Gregg apply for?

Option 1: CIBC Select Visa

Option 2: American Express Essential Credit Card

Option 3: They are all the same costs

Option 4: MBNA True Line Master Card