Use the Information for the Question(s)below

question 85

Multiple Choice

Use the information for the question(s) below.
Two years ago, you purchased a new car. You financed your car for 60 months (with payments made at the end of the month) with a loan at 6.1% APR. Your monthly payments are $617.16 and you have just made your 24th monthly payment on your car.
-The amount of your original loan is closest to:

• A)$31 460
• B)$33 000
• C)$31 846
• D)$33 300

---

Definitions:

M&M Proposition

The Modigliani and Miller Proposition, theories that address the impact of capital structure on a company's value and cost of capital.

Homemade Leverage

A strategy where investors adjust the amount of leverage in their own portfolios by borrowing or lending money to replicate corporate financial leverage.

Capital Structure

This term relates to the way a corporation finances its operations and growth by using different sources of funds, such as debt, equity, and hybrid securities.