Question

At the end of year X, automobile installment credit accounted for 36 percent of all outstanding consumer installment credit. At that time automobile finance companies extended $57 billion of credit, or \small \frac{1}{3} of the automobile installment credit. How many billion dollars of consumer installment credit was outstanding at that time?

Answer 1

Answer: C. 475

Explanation:

We are told that the $57 billion extended by automobile finance companies is 1/3 of the Automobile instalment credit.

Then to find the total Automobile Instalment credit we can use this figure as so,

We multiply 57 by 3 to get the full amount since 57 is a 1/3.

57 x 3 = $171 billion.

$171 billion is the AUTOMOBILE INSTALMENT CREDIT.

We are also told that the Automobile Instalment Credit is 36% of all outstanding Consumer Installment Credit.

To find that figure now we can use simple algebra. Say the Outstanding Consumer Instalment Credit is c.

Equation will be,

0.36(which is 36% in decimals)

0.36*c = 171

The equation shows that 36% of c is $171 billion so now we solve for c.

By dividing both sides by 0.36 we get,

c = 171/.36

c = 475

All OUTSTANDING CONSUMER INSTALLMENT CREDIT is $475 billion.