Matthew Wants to Take Out a Loan to Buy a Car

question 6

Multiple Choice

Matthew wants to take out a loan to buy a car. He calculates that he can make repayments of $5000 per year. If he can get a four-year loan with an interest rate of 7.9%, what is the maximum price he can pay for the car?

• A) $16,598
• B) $19,918
• C) $23,237
• D) $26,557

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Definitions:

Agency Relationship

A legal and fiduciary relationship between two parties, where one, the agent, is authorized to act on behalf of the other, the principal, in business transactions.

Liability

A legal obligation or responsibility to settle a debt or make good on a promise or contract.

Third Parties

Individuals or entities that are not directly involved in a legal agreement or transaction but may be affected by it.

Actual Notice

Notice of agency termination that is given by directly informing third parties, either orally or in writing.