Karen and Wayne Need to Buy a Refrigerator Because Theirs

question 49

Short Answer

Karen and Wayne need to buy a refrigerator because theirs just broke. Unfortunately, their savings account is depleted, and they will need to borrow money to buy a new one. The bank offers them a personal loan at 11% (APR), and BigBox offers them an installment loan at 11% (add-on-rate). Suppose that the refrigerator at BigBox costs $1,331 plus 4% sales tax, and Karen and Wayne plan to pay for the refrigerator for 2 years. Should they finance it with the bank or with BigBox?
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(with the bank / with BigBox / with neither; the interest rate is too high)

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Definitions:

External Influences

Factors outside of an individual that affect their attitudes, decisions, and behaviors, including cultural, social, and environmental forces.

Profit Sharing

A business strategy where employees receive a share of the company's profits in addition to their regular salary.

Cost Savings

Reduction of expenses achieved through efficiency improvements, elimination of waste, or negotiation of lower prices.

Core Dimensions

Fundamental aspects or elements that define the structure or essence of a subject or system.