To determine which strategy is most feasible for Elyse to make a [tex]$4,800 down payment, let's consider the outcome and implications of each one:
1. Purchase a $[/tex]1,000 asset that she can sell for [tex]$5,000 after:
This strategy involves an investment that could potentially yield a profit of $[/tex]4,000 ([tex]$5,000 selling price - $[/tex]1,000 purchase cost). However, this profit is not enough to cover the entire down payment of [tex]$4,800. Therefore, this strategy alone would not allow her to make the full down payment.
2. Use a credit card to pay the down payment five months in advance:
Assuming that Elyse goes with this option, the credit card will incur an interest rate which would add to the cost. Based on the calculation, the total cost to her, after accounting for the interest accumulation over five months, would be $[/tex]5,200. This means she would end up paying more than the original down payment due to interest, making this strategy more costly in the short term.
3. Set aside [tex]$50 per month to pay for the full down payment:
If Elyse saves $[/tex]50 each month towards her down payment, she would take 96 months or 8 years to save [tex]$4,800. This is a very long-term strategy for accumulating the necessary funds purely through monthly savings, which may not be suitable if she is looking to make the down payment in the near future.
4. Put money into her 401(k) to make up for the down payment:
This strategy isn't a direct way to make a down payment since 401(k) funds are meant for retirement savings. Although one could potentially borrow against their 401(k), it comes with various restrictions and financial implications that are not quantified here. Without additional information, it's difficult to assess the full impact or feasibility of this strategy.
Considering all of the strategies, the first strategy seems most immediately lucrative, though it falls short by $[/tex]800. The third strategy is viable but takes a very long time. Without additional context or options, the most likely strategy that Elyse might have developed would have been a combination of strategies such as using the asset investment and perhaps supplementing with savings. As a math teacher, I would advise Elyse to look for additional info and carefully consider the long-term implications of each strategy, and potentially explore more immediate avenues to raise the remaining $800 if she opts for the asset sale.
