Personal Finance 1st Edition by Jack R. Kapoor

Exercise 35

Analyzing the Feasibility of a Loan. Fred Reinero has had a student loan, two auto loans, and three credit cards. He has always made timely payments on all obligations. He has a savings account of $2,400 and an annual income of $25,000. His current payments for rent, insurance, and utilities are about $1,100 per month. Fred has accumulated $12,800 in an individual retirement account. Fred’s loan application asks for $10,000 to start up a small restaurant with some friends. Fred will not be an active manager; his partner will run the restaurant. Will he get the loan? Explain your answer. (Obj. 4)

Step 1 of 2

According to the given information

Annual income	25,000
Savings account	2,400
Current expenses per month	1,100
Individual Retirement Account	12,800
Loan	10,000