Credit Card Evaluation Assignment All of the requirements are in the file! Credit Card Evaluation Assignment Consider the following sit

Credit Card Evaluation Assignment All of the requirements are in the file!

Credit Card Evaluation Assignment

Consider the following situation. Prepare your answer (approximately 1 page) identifying the responses to the questions and your reasons for them.

Scenario: You have received a letter from a credit card company offering you a credit card with a limit of $5,000 at an introductory interest rate of 5%.

What additional information do you need in order to make a decision whether to accept this offer? List specific characteristics you need to consider and why you think they are important.

What factor(s) would cause you to accept this offer? What factor(s) would cause you to decline this offer? Be specific and thorough in your response.

If you accept the offer, how will you manage your credit card debt? QUESTION 1
Credit Card Evaluation Assignment
Consider the following situation. Prepare your answer (approximately 1 page) identifying the
responses to the questions and your reasons for them.
Scenario: You have received a letter from a credit card company offering you a credit card with
a limit of $5,000 at an introductory interest rate of 5%.
What additional information do you need in order to make a decision whether to accept this
offer? List specific characteristics you need to consider and why you think they are important.
What factor(s) would cause you to accept this offer? What factor(s) would cause you to decline
this offer? Be specific and thorough in your response.
If you accept the offer, how will you manage your credit card debt?
QUESTION 2
In an article dated 7/25/14 by AJSmith on Credit.com and sourced from MSN.com, the author
articulated “10 reasons to get life insurance.” Please read the article below and select the two
reasons you feel are most persuasive and write a short (approximately 1 page) explanation as to
why these reasons should persuade someone to buy life insurance as a young adult.
10 reasons to get life insurance
7/25/14 By AJ Smith, Credit.com
Life insurance is a more important component of your financial planning than you likely realize.
Life insurance can be an important part of your financial planning. Many don’t even know why
they might need life insurance. Luckily, there are tools to help answer your questions about this
important decision.
In order to determine how much life insurance you may need, it’s a good idea to know exactly
why you are buying it in the first place. This legal contract between an insured and an insurer,
usually a life insurance company, requires premiums and guarantees a payment given to the
insured’s named beneficiary upon his or her death. But insurance proceeds can go toward a
number of financial obligations. Check out the reasons you may want to consider purchasing life
insurance.
No. 1: Income replacement
If you are a breadwinner in your home, insurance can help pay the bills or offer savings potential
when your income is no longer coming in.
No. 2: Final expenses
With funeral and burial costs totaling more than $10,000, the death of a love one can leave quite
a financial burden. Life insurance can help subsidize or cover these and other medical costs.
No. 3: Estate liquidity
When an estate is inherited, there are many taxes your beneficiary will have to cover. From
paying income taxes to federal estate and state inheritance taxes, insurance policies can provide
some help.
No. 4: Locking in a low premium
Premiums increase as people age. To optimize benefits, buying life insurance at a young age can
lock in a low premium.
No. 5: Transfer family wealth
Life insurance policies can allow you to leave more money to your family as part of your estate.
No. 6: Build cash value
Whole or universal life policies offer a tax-advantaged way to build cash value.
No. 7: Cover debts
A life insurance policy can help pay off a mortgage loan so beneficiaries can continue to live in
the home or to remove the immediate need to sell it. Debt can be inherited, and then follow your
family around for years if they have to go into foreclosure or even declare bankruptcy. You can
see how your debt is currently impacting your credit scores for free on Credit.com.
No. 8: Business succession
For a family business or otherwise, the continuity and succession may require costs like a stock
redemption buy/sell agreement or cross-purchase. To protect your descendants and your
company, life insurance can provide important funds.
No. 9: Tax benefits
Especially for high-income earners, policies can provide a tax shelter and alternative to IRA
options.
No. 10: Charitable gift
A life insurance policy can help make a big impact to a cause important to the newly deceased.
This could be done by donating the policy to charity or by naming the charity as beneficiary.
Once you’ve decided you need life insurance, it’s a good idea to research options and compare
policies to meet your needs.
QUESTION 3
Retirement Planning Assignment
At your age (assume 20) you can assume that you will live to be 100. If you graduate at 23 and
start to work, you can expect to work for 47 years, until age 70. At that time you will be eligible
for full Social Security benefits, which can reasonably be expected to be $3,000 per month, and
which will be received monthly for the rest of your life. You can reasonably expect that your
retirement savings will earn an average of 8 percent per year throughout the period that you
accumulate your retirement funding and during your retirement years. Further assume that you
will want to have an annual income of $120,000 throughout your retirement.
1. Ignoring inflation in all calculations, how much will you need to have saved at retirement
in order to be able to fund your retirement?
2. How much will you have to save each year in order to fund this amount if you start at 23?
3. How much will you have to save each year in order to fund this amount if you start at 25?
4. How much will you have to save each year in order to fund this amount if you start at 30?
5. How much will you have to save each year in order to fund this amount if you start at 40?
6. Briefly explain how you think those funds should be managed. That is, suggest a
reasonable overall plan to achieve your goal, using all of the tools we have considered
throughout the course.

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