Annie would like to take out a loan to put a new playground in her yard for her kids. She offers her car which is worth $7,800 as collateral. The loan officer at the bank is permitted to loan Annie 92% of the value of her collateral. How much will Annie be able to borrow for the playground using her car as collateral?
The bank will lend 92% of the car’s value, so multiply $7,800 by 0.92: $7,800 × 0.92 = $7,176. Annie can borrow $7,176.00, which is choice B.
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