Answer :
Let's begin by calculating the monthly payment Caitlin needs to make to pay off her balance of [tex]$105.86 in 20 months.
First, we determine the monthly payment needed:
\[ \text{Monthly Payment} = \frac{\$[/tex]105.86}{20} = \[tex]$5.293 \]
Next, let's analyze Caitlin's current financial situation to see if she can allocate additional funds for this monthly payment.
Total Income and Expenses:
- Wages (Income): \$[/tex]2896.00
- Rent: \[tex]$1200.00 - Utilities: \$[/tex]212.64
- Food/Clothes: \[tex]$335.00 - Entertainment: \$[/tex]346.00
- Car: \[tex]$490.00 - Credit Card: \$[/tex]105.86
- Cell Phone: \[tex]$116.37 Total Monthly Expenses: \[ \text{Total Expenses} = \$[/tex]1200.00 + \[tex]$212.64 + \$[/tex]335.00 + \[tex]$346.00 + \$[/tex]490.00 + \[tex]$105.86 + \$[/tex]116.37 = \[tex]$2805.87 \] Net Income After Expenses: \[ \text{Net Income} = \$[/tex]2896.00 - \[tex]$2805.87 = \$[/tex]90.13 \]
Since the current net income is \[tex]$90.13, which is insufficient by itself to cover additional expenses of \$[/tex]5.293, we need to examine the given options to reduce monthly expenses to meet the required payment.
Options:
1. Caitlin can eliminate \[tex]$100 from Food/Clothes and \$[/tex]85 from Entertainment.
2. Caitlin can eliminate \[tex]$62 from Food/Clothes and \$[/tex]49 from Entertainment.
3. Caitlin can eliminate \[tex]$54 from Food/Clothes and \$[/tex]120 from Entertainment.
4. The minimum payment is enough to pay off the balance within 20 months.
### Calculating Feasibility of Each Option:
1. Option a: Eliminate \[tex]$100 from Food/Clothes and \$[/tex]85 from Entertainment.
[tex]\[ \text{New Net Income} = \$90.13 + \$100 + \$85 = \$275.13 \][/tex]
Checking if this covers the monthly payment:
[tex]\[ \$275.13 \geq \$5.293 \][/tex]
This option is feasible.
2. Option b: Eliminate \[tex]$62 from Food/Clothes and \$[/tex]49 from Entertainment.
[tex]\[ \text{New Net Income} = \$90.13 + \$62 + \$49 = \$201.13 \][/tex]
Checking if this covers the monthly payment:
[tex]\[ \$201.13 \geq \$5.293 \][/tex]
This option is feasible.
3. Option c: Eliminate \[tex]$54 from Food/Clothes and \$[/tex]120 from Entertainment.
[tex]\[ \text{New Net Income} = \$90.13 + \$54 + \$120 = \$264.13 \][/tex]
Checking if this covers the monthly payment:
[tex]\[ \$264.13 \geq \$5.293 \][/tex]
This option is feasible.
4. Option d: The minimum payment is enough to pay off the balance within 20 months.
This cannot be true because we have already determined the necessary minimum payment: \[tex]$5.293. Conclusion: Options a, b, and c are all feasible in terms of covering the required monthly payment. To choose the option with the least cuts to her current expenses, we need to compare the total reductions in expenses: - Option a: Reduction of \$[/tex]100 from Food/Clothes and \[tex]$85 from Entertainment = Total reduction of \$[/tex]185
- Option b: Reduction of \[tex]$62 from Food/Clothes and \$[/tex]49 from Entertainment = Total reduction of \[tex]$111 - Option c: Reduction of \$[/tex]54 from Food/Clothes and \[tex]$120 from Entertainment = Total reduction of \$[/tex]174
Least Reduction:
Option b (Total reduction of \[tex]$111) Thus, Caitlin should choose Option b: Eliminate \$[/tex]62 from Food/Clothes and \$49 from Entertainment as it requires the least cuts to her current expenses and still allows her to make the necessary monthly payment.
- Rent: \[tex]$1200.00 - Utilities: \$[/tex]212.64
- Food/Clothes: \[tex]$335.00 - Entertainment: \$[/tex]346.00
- Car: \[tex]$490.00 - Credit Card: \$[/tex]105.86
- Cell Phone: \[tex]$116.37 Total Monthly Expenses: \[ \text{Total Expenses} = \$[/tex]1200.00 + \[tex]$212.64 + \$[/tex]335.00 + \[tex]$346.00 + \$[/tex]490.00 + \[tex]$105.86 + \$[/tex]116.37 = \[tex]$2805.87 \] Net Income After Expenses: \[ \text{Net Income} = \$[/tex]2896.00 - \[tex]$2805.87 = \$[/tex]90.13 \]
Since the current net income is \[tex]$90.13, which is insufficient by itself to cover additional expenses of \$[/tex]5.293, we need to examine the given options to reduce monthly expenses to meet the required payment.
Options:
1. Caitlin can eliminate \[tex]$100 from Food/Clothes and \$[/tex]85 from Entertainment.
2. Caitlin can eliminate \[tex]$62 from Food/Clothes and \$[/tex]49 from Entertainment.
3. Caitlin can eliminate \[tex]$54 from Food/Clothes and \$[/tex]120 from Entertainment.
4. The minimum payment is enough to pay off the balance within 20 months.
### Calculating Feasibility of Each Option:
1. Option a: Eliminate \[tex]$100 from Food/Clothes and \$[/tex]85 from Entertainment.
[tex]\[ \text{New Net Income} = \$90.13 + \$100 + \$85 = \$275.13 \][/tex]
Checking if this covers the monthly payment:
[tex]\[ \$275.13 \geq \$5.293 \][/tex]
This option is feasible.
2. Option b: Eliminate \[tex]$62 from Food/Clothes and \$[/tex]49 from Entertainment.
[tex]\[ \text{New Net Income} = \$90.13 + \$62 + \$49 = \$201.13 \][/tex]
Checking if this covers the monthly payment:
[tex]\[ \$201.13 \geq \$5.293 \][/tex]
This option is feasible.
3. Option c: Eliminate \[tex]$54 from Food/Clothes and \$[/tex]120 from Entertainment.
[tex]\[ \text{New Net Income} = \$90.13 + \$54 + \$120 = \$264.13 \][/tex]
Checking if this covers the monthly payment:
[tex]\[ \$264.13 \geq \$5.293 \][/tex]
This option is feasible.
4. Option d: The minimum payment is enough to pay off the balance within 20 months.
This cannot be true because we have already determined the necessary minimum payment: \[tex]$5.293. Conclusion: Options a, b, and c are all feasible in terms of covering the required monthly payment. To choose the option with the least cuts to her current expenses, we need to compare the total reductions in expenses: - Option a: Reduction of \$[/tex]100 from Food/Clothes and \[tex]$85 from Entertainment = Total reduction of \$[/tex]185
- Option b: Reduction of \[tex]$62 from Food/Clothes and \$[/tex]49 from Entertainment = Total reduction of \[tex]$111 - Option c: Reduction of \$[/tex]54 from Food/Clothes and \[tex]$120 from Entertainment = Total reduction of \$[/tex]174
Least Reduction:
Option b (Total reduction of \[tex]$111) Thus, Caitlin should choose Option b: Eliminate \$[/tex]62 from Food/Clothes and \$49 from Entertainment as it requires the least cuts to her current expenses and still allows her to make the necessary monthly payment.
