Critical Thinking- Begin with an introductory paragraph that tells the reader what your document will be about. This paragraph should tell the reader what they should expect to learn from reading your work.
Give the heading an appropriate title. Breaking your work into headings helps the reader follow along easier and also helps you, as the writer, keep your thoughts well organized and structured. Use as many headings as you need in the paper. Remember to include in-text citations throughout your work
Your paper should always end with a concluding paragraph that revisits the important points you made in your paper.
Financing Anita’s Education
At age 19, Anita Turner is in the middle of her second year of studies at a community college in Charlotte. She has done well in her course work; majoring in pre-business studies, she currently has a 3.75 grade point average. Anita lives at home and works part-time as a filing clerk for a nearby electronics distributor. Her parents can’t afford to pay any of her tuition and college expenses, so she’s virtually on her own as far as college goes. Anita plans to transfer to the University of North Carolina next year. (She has already been accepted.) After talking with her counselor, Anita feels she won’t be able to hold down a part-time job and still manage to complete her bachelor’s degree program at UNC in two years. Knowing that on her 22nd birthday, she will receive approximately $35,000 from a trust fund left her by her grandmother, Anita has decided to borrow against the trust fund to support herself during the next two years. She estimates that she’ll need $25,000 to cover tuition, room and board, books and supplies, travel, personal expenditures, and so on during that period. Unable to qualify for any special loan programs, Anita has found two sources of single-payment loans, each requiring a security interest in the trust proceeds as collateral. The terms required by each potential lender are as follows:
a.North Carolina State Bank will lend $30,000 at 6 percent discount interest. The loan principal would be due at the end of two years.
b.National Bank of Chapel Hill will lend $25,000 under a two-year note. The note would carry a 7 percent simple interest rate and would also be due in a single payment at the end of two years.
Critical Thinking Questions
1.How much would Anita (a) receive in initial loan proceeds and (b)be required to repay at maturity under the North Carolina State Bank loan?
2.Compute (a) the finance charges and (b) the APR on the loan offered by North Carolina State Bank.
3.Compute (a) the finance charges and (b) the APR on the loan offered by the National Bank of Chapel Hill. How big a loan payment would be due at the end of two years?
4.Compare your findings in Questions 2 and 3, and recommend one of the loans to Anita. Explain your recommendation.
5.What other recommendations might you offer Anita regarding disposition of the loan proceeds?
The reading comes from the following text Chapters 7-8.
Gitman, L. J., Joehnk, M. D., & Billingsley, R. S. (2014). Personal financial planning (13th ed.). Mason, OH: South-Western.