Yes, that is the amount of the loan Clarissa can afford to borrow.

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In summary, the phrase "Yes, that is the amount of the loan Clarissa can afford to borrow" means that it is the maximum loan amount based on her financial situation. This amount is determined by factors such as her income, credit score, and debt-to-income ratio. It is not fixed and can change depending on any changes in her financial situation. Before borrowing this amount, Clarissa should consider her monthly budget, future financial goals, and the interest rate and terms of the loan. While it is possible for her to borrow more than the mentioned amount, it is not recommended as it may lead to financial difficulties.
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scienceman2k9
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Problem:

Clarissa wants to buy a new car. Her loan officer tells her that her annual rate is 8%, compuded continously, over a four-year term. Clarissa informs her loan officer that she can make qual monthly payments of $225. How much can Clarissa afford to borrow?

I figured that she will pay $10800 (48 months * $225)

Skipping the differential derivation...

If A(t)=Ke^.08t ...whre t=4 and A(4)=10800...then k=$7842.41...is this the amount (principle) of the loan? I'm not accounting friendly :(
 
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  • #2
that is correct
 

What is the meaning of "Yes, that is the amount of the loan Clarissa can afford to borrow"?

The phrase means that the amount mentioned is the maximum loan amount that Clarissa is able to borrow based on her financial situation.

How is the loan amount that Clarissa can afford to borrow determined?

The loan amount is determined by Clarissa's income, credit score, and debt-to-income ratio. Lenders use this information to assess her ability to repay the loan.

Is the loan amount fixed or can it change?

The loan amount is not fixed and can change based on any changes in Clarissa's financial situation, such as a change in income or credit score.

What factors should Clarissa consider before borrowing this amount?

Clarissa should consider her monthly budget, future financial goals, and the interest rate and terms of the loan before borrowing this amount. She should make sure that she can comfortably afford the loan payments and that it aligns with her long-term financial plans.

Can Clarissa borrow more than the amount mentioned?

It is possible for Clarissa to borrow more than the mentioned amount, but it is not recommended. Borrowing beyond her means could lead to financial difficulties and difficulties in repaying the loan.

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