Logan Would Like to Purchase Susanne's Car

question 17

Multiple Choice

Logan would like to purchase Susanne's car.He asks her two questions - if the car has new tires and if there is any structural damage to the car.Susanne answers the first question immediately and truthfully,but she is unsure of the second answer and tells Logan that she will have it inspected to find out and will get back to him on Thursday.Susanne forgets to get the car checked,so when Logan calls she lies and says the inspector told her the car was in perfect condition.Logan buys the car.If it turns out there is something wrong with the car,which of the following is true?

• A)Susanne may only have to take the car back and return Logan's money.
• B)Logan is stuck with the car.
• C)Susanne may try to get the car back even if Logan wants to keep it.
• D)Susanne may be sued for damages.
• E)Susanne has committed innocent misrepresentation.

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Definitions:

Capital Structure

The mix of a company's long-term debt, specific short-term debt, common equity, and preferred equity which constitute its funding.

Corporate Tax Rate

The percentage of a corporation's profits that is handed over to the government as tax.

Depreciation Expense

The allocation of the cost of a tangible asset over its useful life.