Question

the value of buying insurance for a cell phone is to (1 point)
○ permit an upgrade to a newer model cell phone
○ be able to replace the cell phone if it is lost or stolen
○ lower the cost of roaming charges on the cell phone
○ be able to charge the cell phone service provider.

if a person has to pay $35 a year on each $100 borrowed, the cost in interest is (1 point)
○ better than the average debit card fee
○ worse than our us trade deficit
○ low
○ high

when a person wins $5,000 in the lottery, the person will

Explanation:

First Question (Cell Phone Insurance)

Cell phone insurance typically covers loss, theft, or damage. Upgrading isn't its main value, roaming charges are from service, and charging the provider isn't typical. Replacing if lost/stolen is a key insurance benefit.

Step1: Calculate interest rate

The interest paid is $35 per $100 borrowed per year. The interest rate $r$ is calculated as $\frac{35}{100} \times 100\% = 35\%$.

Step2: Evaluate the rate

Typical loan or credit interest rates (like personal loans, credit cards) are often lower than 35% (e.g., many personal loans are 5 - 36%, credit cards average around 16 - 25% in some cases, but 35% is relatively high for a yearly rate on borrowed money). So the cost in interest is high.

Answer:

B. be able to replace the cell phone if it is lost or stolen

Second Question (Interest Cost)