scenario 5: rudy has been eyeing a vehicle at...

scenario 5: rudy has been eyeing a vehicle at a local car lot. he has always wanted a truck and this one is sweet! his car has been running fine, but this is one of his dreams. he just started work as a salesman a few months ago and a lot of his income comes from commissions. in other words, the more he sells, the more money he makes. the company told him sales typically slow down from the holiday season until the beginning of the new year. he knows the truck payments will be pretty high. should he take out a loan at the bank? what do you think? scenario 6: sierra has wanted a dog, preferably a puppy, for a really long time. her parents told her if she saved enough money she could get one from the local animal shelter. however, she just found out that puppies are much more expensive than a dog who is older. sierra has a part - time job but hasnt saved up enough money for a puppy. she has a credit card with a high enough credit limit to purchase the puppy but it may take 3 or 4 months to pay for it. should she buy the puppy and put it on her credit card? what do you think? who do you think has the strongest case for getting a loan? why? be prepared to defend your answer in the class discussion.

Answer

# Brief Explanations: For Rudy, his income from commissions is uncertain as sales are expected to slow down, and truck payments will be high. Taking a loan may lead to financial stress if his income drops. For Sierra, using a credit - card for a non - essential purchase (a puppy) when she hasn't saved enough and it will take months to pay off can lead to credit card debt and interest payments. However, compared to Rudy, Sierra's expense is smaller in scale and the repayment period is relatively short. Also, a credit card is different from a bank loan. Rudy's situation is riskier as a bank loan for a large - ticket item (truck) with uncertain future income is a more significant financial commitment. # Answer: Sierra has a stronger case. Her expense is smaller and repayment is over a few months on a credit card, while Rudy faces uncertain income and large truck loan payments.