Jacob Needs to Borrow $19 000 to Purchase a Car

question 10

Multiple Choice

Jacob needs to borrow $19 000 to purchase a car.If the interest rate is seven percent compounded monthly,which of the following is true when considering a five,seven or ten year term?

• A)If he selects a seven year term he will save interest by keeping his payments to $286.76 per month.
• B)If he selects a ten year term he will save $2385.28 in interest compared with the seven year term.
• C)If he selects a five year term he will save $1514.55 in interest compared with the seven year term.
• D)The overall interest will be the same,regardless of the term.

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Definitions:

MBO

Management Buyout, which is a transaction where a company's existing managers acquire a large part or all of the company.

Management Buyouts

A transaction where a company's management team purchases the assets and operations of the business they manage.

Limited Amount

A specific quantity or volume that is constrained or not in abundance, often applied to resources or capacities.

Note

A financial security that denotes a debt and is commonly used in agreements to specify terms of borrowing or promises to pay back a debt under specified conditions.