Answer:
Explanation:
In 2019, the gross income test is an official order that all dependents have no right to earn more than a given amount of income each year which is ($4200).
To compute the gross income for James Father, we have:
Description Amount
Gross income for rents $3000
Municipal Bond Interest 0
Dividend Income $1500
Social Security: 0
(since social security is exempted from the gross-income dependency test;
The total gross income = $4500
Thus, the gross income for James Father is $4500 as such he is not qualified to be dependent.
Answer: Option A which is the Dealership 0% financing option will be preferable if the Price of the car is less than the different of Loan monthly Payments minus Rebates.
Explanation:
OPTION 1
A buyer pays 60 monthly instalments and the interest rate is 0%. This tells us that there is no interest the value of the debt (Which is the price of 2003 Protege S hatchback) will not increase over the period of 60%, with this option time value of money is not considered.
Option 2
The buyer receives a Rebate of $3600 if the car is paid for in cash. The buyer qualifies for a loan at an effective rate of 7% per annum. The amount of a loan will be the Price of a 2003 Protege S Hatchback. Assuming the Loan will also ave a period of 60 months, The Total amount Payable over the period of 60 months equals Loan Monthly payments multiplied by 60 months. The buyer receives a rebate of $3600, therefore The Net Amount Payable for Option 2 financing is found by multiplying Loan monthly payments by 60 months then subtract the Cash Rebate received of $3600
Let us now compare the two options to find out how Large must the Car be for option A to be preferable.
Y = The Price of a 2003 Protege Hatch Back, Which also equals the amount of debt over a period of 60 years (option A has no interest)
Monthly Payments of a loan = P
number of Periods = 60 months
Debt in 60 months versus Loan payments multiplied by 60 months - rebate
Therefore Y ∠ P x 60 months - $3600
Option A which is the Dealership 0% financing option will be preferable if the Price of the car is less than the different of Loan monthly Payments minus Rebates.