1. Bridget Morrow is a sophomore at State College and is running out of money. Wanting to continue her educations, Bridget is considering a student loan. Explain her options. How can she best minimize her borrowing cost and maximize her flexibility. a. Bridget can opt for an education loan. This will give her the opportunity of not having to pay for interest immediately after borrowing the money. Instead, she will have the option of paying the interest one year after the completion of her studies. Doing this will allow Bridget to minimize her borrowing costs and maximize her flexibility. 3. Every six months, Brad Stengel takes an inventory of the consumer debts that he has outstanding. His latest tally shows that he still owes $4,000 on a home improvement loan (monthly payments of $125); he is making $85 monthly payments on a personal loan with a remaining balance of $750; he has a $2,000, secured, single-payment loan that’s due next year; he has a $70,000 home mortgage on which he’s making $750 monthly payments; he still owes $8,600 on a new car loan (monthly payments of $375); and he has a $960 balance on his MasterCard (minimum payment of $40), a $70 balance on his Exxon credit card (balance due in 30 days) and a $1,200 balance on a personal line of credit ($60 monthly payments). Use Worksheet 7.1 to prepare an inventory of Brad’s consumer debt. Find his debt safety ratio, given that his take-home pay is $2.500 per month. Would you consider this ratio to be good or bad? Explain. a. Debt Safety Ratio: $1,435 (total monthly payments) / $2,500 (monthly take home pay) = 57%. b. Brad’s debt safety ratio is good because he could still afford to comfortably pay his monthly payment from his take home money. 4. Using the simple interest method, find the monthly payments on a
