Answer:
The correct answer is option (d).
Explanation:
According to the scenario, the given data are as follows:
Truck cost = $20,000
Net income from truck = $4,000
If work somewhere else, Net income = $3,000
If he work some where else he save $20,000.
If the interest rate is 5%, then,
Interest amount = 5% × $20,000 = $1,000
So, it means, if the interest rate is 5%, and he work some where else than his net income = $3,000 + $1,000 = $4,000.
So, If the real interest is less than 5% only than purchasing a truck is the right option.
Hence, purchase the truck if the real interest rate is less than 5% is correct.
