Question

Travis is buying a car and will finance it with a loan that requires monthly payments of $265 for the next four years. His car payments can be described by which one of the following terms?

1) Perpetuity
2) Annuity
3) Consol
4) Lump sum
5) Present value

Answer 1

Travis is paying off his car through an 2. annuity, which consists of regular monthly payments over a set period of four years.

Step-by-step explanation:

Travis' car payments can be described as an annuity. An annuity refers to a series of equal payments made at consistent intervals, such as monthly payments, over a fixed period. Therefore, since Travis is making monthly payments of $265 over the next four years for his car loan, he is paying through an annuity.

Travis' car payments can be described as an annuity. An annuity refers to a series of equal payments made at consistent intervals, such as monthly payments, over a fixed period. Therefore, since Travis is making monthly payments of $265 over the next four years for his car loan, he is paying through an annuity.

To summarize:

Travis is making monthly payments on his car loan.

These payments are made over a fixed period of four years.

The financial term that describes this payment structure is an annuity.