In this assignment, you will take on the role of a student applying to post-secondary schools. You are beginning to explore your options for financing your education.
PART I – RESEARCH
You have heard about the costs associated with OSAP loans and are looking for an alternative financing method. A friend has introduced you to the idea of credit cards and you find them to be an enticing method of payment. Take a moment to review the advantages and risks of using a credit card by clicking here. Now that you are an expert on credit cards, it is time to select the right card to finance your first year of post-secondary education.
1. Conduct research into a major consumer credit card of your choosing. State the card you researched and the interest rate.
2. Conduct research on the post-secondary school and program of your choice. State the school/program you researched and the cost of tuition for one year.
PART II – CALCULATIONS
1. For the card you researched, calculate how much interest you would owe if you paid for your first year of post-secondary education and made no payments for 1 year (assume interest is compounded monthly).
2. You want to pay off the balance you have accumulated on your card in two years. What regular monthly payment would you need to make?
3a) Perhaps using a credit card is not the best option! Conduct research into a high interest savings account offered by a major financial institution. State the bank, account type, and interest rate offered.
b) Using the amount for one year of tuition you found in your research, determine the regular monthly deposits you would need to make in your high interest savings account in order to have enough to pay for your first year of post-secondary education (assume interest is compounded monthly and that you plan to make these deposits for five years).
4. Luckily you just found out that your family has been making regular $50 monthly deposits into a high interest savings account since the day you were born. Using the high interest savings-account you researched, determine how much money would be in this savings account on your 18th birthday if interest is compounded monthly. Does this account contain enough money to pay for your first year of tuition?
