PFIN 3rd Edition by Lawrence Gitman,Michael Joehnk,Randall Billingsley

Exercise 1

Isaac Primack recently graduated from college and is evaluating two credit cards. Card A has an annual fee of $75 and an interest rate of 9 percent. Card B has no annual fee and an interest rate of 16 percent. Assuming that Isaac intends to carry no balance and pay off his charges in full each month, which card represents the better deal? If Isaac expected to carry a significant balance from one month to the next, which card would be better? Explain.