Question

Annie would like to take out a loan to put a new playground in her yard for her kids. She offers her car which is worth $7,800 as collateral. The loan officer at the bank is permitted to loan Annie 92% of the value of her collateral. How much will Annie be able to borrow for the playground using her car as collateral?

a.

$7,708.00
b.

$7,176.00
c.

$7,800.00
d.

$8,478.26

Answer 1

7,176.00

Step-by-step explanation:

Answer 2

Annie will be able to borrow $ 7,716.00 for the playground using her car a collateral (option b).

Step-by-step explanation:

Interpretation of the problem: to take out a loan to put a new playground in her yard for her kids, Annie offers her car which is worth $ 7,800 as collateral. Since the loan officer at the bank is permitted to loan Annie 92% of the value of her collateral, in order to know how much Annie will be able to borrow, you must use percentage calculations.

Percent is a definition: percent is the ratio of an amount with respect to one hundreed. The mathematical expressions derived from that definition is:

• Percent, % = (amount / base) × 100

In this case, the percent that the officer is permitted to loan is known, 92%, the amount to borrow is unknown (x), and the base is the value of her car (the collateral), $ 7,800, which leads to the following equation:

• 92 = (x / 7,800)×100

Now, you can solve for x:

• x = 7,800 × 92/100 = 7,800 × 0.92 = 7,176.00

In conclusion, Annie will be able to borrow $ 7,716.00 for the playground using her car as collateral.