When an individual obtains a car loan and makes all of the regular monthly payments, the sum of the payments made will exceed the purchase price of the car.This is due primarily to the core principle:
A)Risk requires compensation
B)Information is the basis for decisions
C)Markets determine prices and allocate resources
D)Time has value

Question

Quizplus · Accepted Answer

The core principle at play here is "Time has value." When an individual obtains a car loan, they are essentially borrowing money to purchase the car and agreeing to pay back the loan with interest over a period of time. This means that the total amount paid back (the purchase price plus interest) will be higher than the initial purchase price, reflecting the fact that the lender is compensating for the time value of money. Therefore, the sum of the payments made will exceed the purchase price of the car.

When an Individual Obtains a Car Loan and Makes All