Olivia Is Willing to Pay $185 a Month for Four

question 63

Multiple Choice

Olivia is willing to pay $185 a month for four years for a car payment.If the interest rate is 4.9 percent,compounded monthly,and she has a cash down payment of $2,500,what price car can she afford to purchase?

• A)$10,961.36
• B)$10,549.07
• C)$8,533.84
• D)$8,686.82
• E)$8,342.05

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Definitions:

Capital Markets

Financial markets where long-term debt or equity-backed securities are bought and sold, aiding in the raising of capital.

Derivatives

Financial contracts whose value is based on the performance of an underlying asset, index, or interest rate, used for hedging risks or speculating.

Financially Sound

A description of an entity's state when it has stable financial health, showing both short-term liquidity and long-term solvency.

Financially Distressed

The situation in which a company or individual cannot meet or has difficulty paying off financial obligations.