Jonathan Deman's income this month is $2000 after taxes. He has $1000 in fixed expenses which include his car payment and rent

Question

Jonathan Deman's income this month is $2000 after taxes. He has $1000 in fixed expenses which include his car payment and rent and $600 in variable expenses including groceries, entertainment and clothing purchases. He deposits $100 in his savings account each month. Suppose that Jonathan's refrigerator breaks during the month and he has to decide whether
to repair it for $500 or purchase a new refrigerator on credit for $300 a month over the next year. What should he do?
a. He can purchase or repair the fridge now with no changes to his budget
b. He does not have enough money to do either of these options
c. He has enough money in his budget to repair the fridge, but not to purchase a new one
d. He will need to make changes to his variable expenses in order to repair the fridge, but he could buy one on credit and still meet his budget.

Kunduz · Accepted Answer

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