Question

Read the scenario.Brad has a steady job, solid income, and plans to live in a nearby city for the long term. He is looking to purchase both a car and a place to live, and he is very interested in building up equity and credit to add to his assets.Which of the following illustrates the most economically sound choice for Brad?a. Carb. housec. Credit and Equityd. Car and House

Answer 1

D) Car and House

Step-by-step explanation:

Brad is faced with a common dilemma of needing a place to live and for most young people that means far away from our work. He could decide to just buy a car, but he would have to rent a place to live for a few more years. On the other hand, if he decides to buy only a house, how will he get from his house to his job. Not everyone can commute.

Since Brad seems to be young and economically stable, he can go for both, a house which is a really serious and long time commitment, and a car (maybe even a used car). A lease will probably be a bad idea because the distances traveled are probably too high and 12,000 miles per year are not a lot.

By getting a mortgage, Brad will not have to pay rent anymore, and at least he will deduct interest payments from his taxes.

Answer 2

d. Car and House

Step-by-step explanation:

Based on the scenario being described within the question it can be said that the most economically sound choices would be to buy both a car and a house. This is mainly because both of these provide utility as well as a capital value for Brad. Since he can always resell them and in the meantime take full advantage of the purchases.