Question

Janie just inherited a large sum of money from her grandmother in the amount of $10,000. Janie was

thinking of buying a new car but would require additional money to cover the full cost of the automobile.
Currently, interest rates are high. What would be the best option for Janie to do? (Select all that apply.)
Withdraw money from her existing bank account to buy the car.
Wait until the Fed lowers the discount rate to take out a car loan.
Deposit the money into a bank account.
O Take out a car loan and buy a new car.

Answer 1

Janie should consider waiting to purchase the car until interest rates decrease, or deposit the $10,000 into a bank account to earn interest. High current interest rates make loans more expensive, so investing her inheritance or saving it may be a more economical choice.

Step-by-step explanation:

If Janie has just inherited $10,000 and is considering buying a new car that costs more than this amount, she has several options:

• • Wait until the Federal Reserve lowers the discount rate to take out a car loan.

• • Deposit the money into a bank account and potentially earn interest while waiting for a better time to purchase the vehicle

Given that the interest rates are high, Janie might consider waiting to purchase the car or depositing the money into a bank account to earn interest if she doesn't need the car immediately. High interest rates mean that any loan she takes out will be more expensive over time. Investing her inheritance wisely now could benefit her by growing the principal through interest accumulation or investments with a higher return than the loan's interest rate.