5
AssignmentMultiple Select

Principles of Financial Planning

Question 5 • Personal Finance - EL3403

What should Frankie consider before buying the car? Check all that apply.

Answer
A
what he will be giving up if he spends $800 on the car
B
the cost to maintain (oil, tires, gas, brakes) and insure the car
C
how many of his friends have cars
D
his short- and long-term financial goals
E
if an alternate mode of transportation, such as a bicycle or the bus, is sufficient for his needs

Explanation

Frankie should compare the $800 purchase with what else that money could be used for, so he understands what he would give up. He should also account for ongoing costs like maintenance, gas, and insurance, and consider how the purchase fits his short- and long-term financial goals. Finally, he should decide whether a bicycle or bus would meet his transportation needs; how many friends own cars does not help him make that decision.

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