Question

Mary receives a $10,000 inheritance on her 21st birthday. She pays $500.00 a month for rent; owes

$9,000.00 on her car loan with an interest rate of 5%; and owes $50,000 in student loan debt with a fixed

interest rate of 3%. She has a Visa Card with a balance of $600 at 16% interest.

Which is the wisest choice for Mary?

Use it all to pay down the student loan debt.

B

Put it all in a savings account that has an interest rate of 2%.

C

Use most of it to pay off the $600 credit card and the $9,000 car loan.

D

Use it all to pay rent in advance.

Answer 1

i think it would be C

Step-by-step explanation:

If she had 10,000 to begin with, she payed with 500 then she has 9,500, if she pays off her credit card, she'll end up with 8,900 and she can find 100 faster that way. however i say i think because idk ab the interest rates. hope it helped.

Answer 2

Answer: C.) Use most of it to pay off the $600 credit card and the $9,000 car loan.

Explanation: Given the interest rates on the credit card and car loans, using most of the amount inherited to offset those loans would be a wise idea. With loan on car being 5% and credit card interest being 16%. If she probably dedicates a substantial amount to those two options, accumulated interest would be greatly reduced .Paying advance rent when she has loans to settle isn't the best. Similarly saving the cash at a 2% interest when one gas larger interest loan percentages to incur isn't the smartest either .Also given the amount of the student loan debt, using it all to cover down payment would still mean a debt of $40,000 in student loan. So it isn't the wisest decision to make.