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20 Nov 2025, 05:06
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C
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
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50% (01:15) correct
50%
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wrong
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Nate has one credit card and no outstanding loans. For an $8,000 purchase, Nate has two viable options: use his card or take a loan from Bank K. Each of these has its own fixed interest rate and no additional fees. For such an amount, the card requires a minimum monthly payment of $400. The bank loan is available with a term of six, nine, or twelve months. Nate can afford a maximum monthly payment of $1,500, and his only other consideration is to minimize the total amount paid over and above the amount borrowed. Based on these considerations, which is the better option for Nate to choose?
(1) If Nate uses his card, he could pay off the incurred debt in six months by paying $1,460 each month.
(2) If Nate takes a loan from Bank K with a tenure of six months, the minimum monthly amount due will be $1,540.
Screenshot 2025-11-20 161931.png [ 183.26 KiB | Viewed 54 times ]
(1) If Nate uses his card, he could pay off the incurred debt in six months by paying $1,460 each month.
(2) If Nate takes a loan from Bank K with a tenure of six months, the minimum monthly amount due will be $1,540.
Attachment:
Screenshot 2025-11-20 161931.png [ 183.26 KiB | Viewed 54 times ]
ravi1522
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20 Nov 2025, 05:18
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Nate has one credit card and no outstanding loans. For an $8,000 purchase, Nate has two viable options: use his card or take a loan from Bank K. Each of these has its own fixed interest rate and no additional fees. For such an amount, the card requires a minimum monthly payment of $400. The bank loan is available with a term of six, nine, or twelve months. Nate can afford a maximum monthly payment of $1,500, and his only other consideration is to minimize the total amount paid over and above the amount borrowed. Based on these considerations, which is the better option for Nate to choose?
(1) If Nate uses his card, he could pay off the incurred debt in six months by paying $1,460 each month.
By this statement we get only card nothing about the bank
Statement 1 not sufficient
(2) If Nate takes a loan from Bank K with a tenure of six months, the minimum monthly amount due will be $1,540.
By this statement we get only bank nothing about the card
Statement 2 not sufficient
so when we combine statement then we get value and we can compare
Hence Option C is correct option
(1) If Nate uses his card, he could pay off the incurred debt in six months by paying $1,460 each month.
By this statement we get only card nothing about the bank
Statement 1 not sufficient
(2) If Nate takes a loan from Bank K with a tenure of six months, the minimum monthly amount due will be $1,540.
By this statement we get only bank nothing about the card
Statement 2 not sufficient
so when we combine statement then we get value and we can compare
Hence Option C is correct option
20 Nov 2025, 05:42
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Nate has one credit card and no outstanding loans. For an $8,000 purchase, Nate has two viable options: use his card or take a loan from Bank K. Each of these has its own fixed interest rate and no additional fees. For such an amount, the card requires a minimum monthly payment of $400. The bank loan is available with a term of six, nine, or twelve months. Nate can afford a maximum monthly payment of $1,500, and his only other consideration is to minimize the total amount paid over and above the amount borrowed. Based on these considerations, which is the better option for Nate to choose?
(1) If Nate uses his card, he could pay off the incurred debt in six months by paying $1,460 each month.
Since 1,460 < 1,500, this fits his budget. Next, the total paid on the card in that 6-month plan will be $1,460 * 6 = $8,760, so he pays an extra $760 over $8,000. But we know nothing about the bank’s cost, so this statement alone is not sufficient.
(2) If Nate takes a loan from Bank K with a tenure of six months, the minimum monthly amount due will be $1,540.
Since 1,540 > 1,500, the 6-month bank loan is not even affordable for Nate. But we still do not know the card’s numbers, so this statement alone is not sufficient.
(1)+(2) For a 6-month payoff:
So the credit card is clearly the better option (less amount paid over $8,000) and the only affordable option compared with the 6-month bank loan.
Increasing the bank loan term (9 or 12 months instead of 6) can only increase the total interest paid, not decrease it. So any 9- or 12-month loan from the bank will cost more than $9,240 in total, increasing the amount paid over $8,000.
Thus, Nate can afford the 6-month card plan (1,460 ≤ 1,500), so that is a feasible option. A 6-month Bank K loan is not affordable (1,540 > 1,500), and any longer bank term will cost even more total interest than the already worse 6-month bank loan. So, Nate should use his credit card. Sufficient.
Answer: C.
(1) If Nate uses his card, he could pay off the incurred debt in six months by paying $1,460 each month.
Since 1,460 < 1,500, this fits his budget. Next, the total paid on the card in that 6-month plan will be $1,460 * 6 = $8,760, so he pays an extra $760 over $8,000. But we know nothing about the bank’s cost, so this statement alone is not sufficient.
(2) If Nate takes a loan from Bank K with a tenure of six months, the minimum monthly amount due will be $1,540.
Since 1,540 > 1,500, the 6-month bank loan is not even affordable for Nate. But we still do not know the card’s numbers, so this statement alone is not sufficient.
(1)+(2) For a 6-month payoff:
- Card: total $8,760 (extra $760) and a monthly payment of $1,460, which is affordable for Nate.
- Bank: total $9,240 (extra $1,240) and a monthly payment of $1,540, which is not affordable for Nate.
So the credit card is clearly the better option (less amount paid over $8,000) and the only affordable option compared with the 6-month bank loan.
Increasing the bank loan term (9 or 12 months instead of 6) can only increase the total interest paid, not decrease it. So any 9- or 12-month loan from the bank will cost more than $9,240 in total, increasing the amount paid over $8,000.
Thus, Nate can afford the 6-month card plan (1,460 ≤ 1,500), so that is a feasible option. A 6-month Bank K loan is not affordable (1,540 > 1,500), and any longer bank term will cost even more total interest than the already worse 6-month bank loan. So, Nate should use his credit card. Sufficient.
Answer: C.
