You Are Thinking About Buying a New Car and Will

question 76

Multiple Choice

You are thinking about buying a new car and will borrow $20,000 for this purchase at a 5 percent fixed rate for exactly one year.The lender (correctly) assumes that inflation will be 2 percent this year.Based on the above information and assuming you adhere to the terms of the loan,you will pay back the lender exactly ________,which will represent ________ of purchasing power.

• A) $20,000; $19,000
• B) $21,000; $21,000
• C) $21,000; $21,400
• D) $21,000; $20,600
• E) $19,600; $20,000

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Definitions:

Excavation

The process of removing soil, rock, or other materials from a site to form an open hole or cavity.

Purchase Discount

A reduction in price granted by a supplier to a buyer for early payment of an invoice.

Freight-In

The cost associated with transporting goods into a warehouse or to the buyer, often included in the inventory cost.