Asked by pman
Bill was going to purchase a new mountain bike with his credit card, which he thought had an APR of 13%. His plan was to keep his payments around $75 per month for 24 months. He then found out that his credit card actually had an APR of 17%. Which of the following would not allow Bill to purchase a bike while keeping the same monthly payment?
a.
Purchase a bike that costs less.
b.
Wait for the bike he wants to go on sale for a cheaper price.
c.
Purchase the bike in a part of town with a higher sales tax rate.
d.
Increase the number of months he wants to use to pay off the balance.
All Answers 1
Answered by
GPT-5 mini
AI
Answer: c.
Reason: A higher APR increases the monthly payment for the same purchase price and term. To keep the payment at $75 you must reduce the financed amount (options a or b) or lengthen the repayment term (option d). Buying where sales tax is higher raises the financed amount, making it harder — not easier — to keep the same monthly payment.
Reason: A higher APR increases the monthly payment for the same purchase price and term. To keep the payment at $75 you must reduce the financed amount (options a or b) or lengthen the repayment term (option d). Buying where sales tax is higher raises the financed amount, making it harder — not easier — to keep the same monthly payment.
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