Marc bought a new car last year for $10,000.He can now sell the car for $8,500.To buy this year's model he would have to pay $11,000.Marc also had to take out a $9,000 loan to buy the car,which had to be paid back in yearly installments of $3,300 per year over three years.What is the implicit rental rate of the first year's use of the car?
A)$2,800
B)$1,300
C)$1,800
D)$13,300
E)$4,800

Question

Quizplus · Accepted Answer

The implicit rental rate is the cost of using the car for one year, expressed as a percentage of the original purchase price. 
First, we need to calculate the total cost of owning the car for one year: 
- Purchase price: $10,000 
- Loan payments: $3,300 
- Depreciation (the decrease in value of the car): $10,000 - $8,500 = $1,500 
Total cost: $14,800 
Next, we calculate the implicit rental rate: 
Implicit rental rate = (total cost / purchase price) x 100% 
Implicit rental rate = ($14,800 / $10,000) x 100% 
Implicit rental rate = 148% 
Therefore, the implicit rental rate of the first year's use of the car is 148%. 
The only answer choice that is close to this value is C) $1,800.

Marc Bought a New Car Last Year for $10,000