Answered

Adam's bank account has a balance of $\$ 1213.69$ before he starts spending money. He makes the following transactions:




Transaction		Cost (\$)

Car payment		260.16

Groceries		97.98

Parking ticket		75.00

DVD box set		115.35

Antique lamp		68.53

Suit		331.84






Adam is considering getting his car a new paint job. Doing so will have a total cost of \$264.83. Can Adam afford this?


AYes, he can make the purchase and still have money left over.
BYes, but doing so will clear out his account.
CNo, purchasing that would overdraw his account.
DNo, he is overdrawn already.

Verified Answer :

  • Calculate total expenditures: \(\$260.16 + \$97.98 + \$75.00 + \$115.35 + \$68.53 + \$331.84 = \$948.86\).
  • Determine current balance: \(\$1213.69 - \$948.86 = \$264.83\).
  • Compare remaining balance with paint job cost: \(\$264.83 - \$264.83 = \$0.00\).
  • Final conclusion: Adam can afford the purchase, but it will clear out his account; option \(\boxed{b}\).

Explanation

  1. Analyzing Initial Account Balance and Expenditures

To determine if Adam can afford the car paint job, we first analyze his account activity. Adam starts with an initial balance of \(\$1213.69\). He then completes a series of transactions: a car payment (\(\$260.16\)), groceries (\(\$97.98\)), a parking ticket (\(\$75.00\)), a DVD box set (\(\$115.35\)), an antique lamp (\(\$68.53\)), and a suit (\(\$331.84\)). The sum of these expenses is \(\$260.16 + \$97.98 + \$75.00 + \$115.35 + \$68.53 + \$331.84 = \$948.86\). Subtracting this total expenditure from his initial balance, we find his current balance to be \(\$1213.69 - \$948.86 = \$264.83\).

  1. Evaluating the Affordability of the Paint Job

Now we evaluate whether Adam can afford the additional cost of \(\$264.83\) for the car paint job. With a current balance of \(\$264.83\), Adam compares this amount against the cost of the paint job, which is also \(\$264.83\). Subtracting the cost of the paint job from his current balance gives us \(\$264.83 - \$264.83 = \$0.00\). Since the remaining balance after the purchase is exactly \(\$0.00\), this means the purchase will exhaust all of the remaining funds in his account.

  1. Conclusion

Because Adam's remaining balance is exactly sufficient to cover the cost of the paint job, leaving him with an account balance of \(\$0.00\), the correct option is that he can afford the purchase, but it will clear out his account. This corresponds to option (b).

Examples

Managing a budget is a fundamental skill in personal finance. Just like in this example, calculating your remaining balance after a series of planned expenses allows you to determine if you can afford future purchases. This helps prevent unexpected overdrafts and keeps your financial health in check. By tracking every dollar, you can make informed decisions about your spending and saving habits.