Question

Mary is taking to a vehicle dealer about buying a new Yugo The dealer will finance the Yugo over 60 months at 1.75% interest with

monthly payments. Mary has saved $1,588 for a down payment and believes she can afford monthly payments of $400. About what is
the most expensive Yugo can Mary buy?
a. $27.380
b. $28.131
c. $29.719
d. $35.504

Answer 1

Mary can afford a Yugo with a maximum cost of $27,000.Correct answer is (option a).

Step-by-step explanation:

To determine the most expensive Yugo that Mary can afford, we need to calculate the loan amount she can take based on her down payment and monthly payments. First, subtract the down payment of $1,588 from the total cost of the Yugo.

Then, divide the remaining cost by the loan term of 60 months and add the 1.75% interest rate to calculate the monthly payment. If the monthly payment is less than or equal to $400, Mary can afford the Yugo. Using these calculations, the most expensive Yugo Mary can buy is $27,000 (option a).