Read each question carefully. choose the answer that best completes the sentence. 1. debt is usually

1.purchase of car

2.pay as much as possible toward the debt at the beginning of the month

3.$16.03 saved

4.$2.81 is lost

Step-by-step explanation:

1.

By definition of debt which is money owed then credit cards and student loans come under debt.

So between buying a car or a house, as houses are more expensive than cars hence, the correct answer is purchase of car.

Debt is usually expected in any of the following cases except purchasing of car.

2.

To reduce the interest on debts the most suitable option is to pay as much as you can at the beginning of the month.

Hence most suitable option is pay as much as possible toward the debt at the beginning of the month.

3.

Money owed=1350

Payment at the beginning of the month=300

Finding monthly rate:

14.25% / 12 = 1.1875%

if payment made at the beginning of the month:

1350 -300= 1050

if payment made at the end of the month

1350+ (1350*1.1875%)-300= 1,066.03

So interest saved by paying at the beginning of the month versus

1066.03-1050=16.03.

2)

Finding monthly rate:

(3%/12)= 0.25%

$300 in a savings account earning 3% APR:

300*(0.25%) = $0.75 earned in one month.

$300 on a credit card at an APR of 14.25%:

300*(1.1875%) = $3.56 costed in one month.

So if $3.56 is spent on the credit card to get $0.75 in savings account then $2.81 is lost!

1) The best way to pay off a debt is to pay as much as you can at the beginning of the month in order to decrease the interests you would pay on the principal during that month.
Putting money in a saving account, although it allows you to earn money, does not decrease the interest on the principal, resulting in a loss of money.
Therefore, the correct answer is A) pay as much as possible toward the debt at the beginning of the month.

2) You get into debt when you buy something you can not afford at the moment of the purchase.
By definition, credit cards and student loans consider a debt.
Between a house and a car, it is more logical that you have the money to buy a car rather that to buy a house, which is usually much more expensive.
Therefore, the correct anser is C) purchase of a car.