Will max be able to afford the additional loan payment

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Financial Leverage Max Small has outstanding school loans that require a monthly payment of $ 1,000. You need to buy a new car to work and you estimate that this will add $ 350 a month to your monthly obligations. Max will have $ 3,000 available after paying all his monthly living (operating) expenses. This amount can be increased or decreased by 10%.

Problem a) To evaluate the potential effect of the additional loan on your financial leverage, calculate the GAF in tabular form for both the proposed and current monthly payments, considering the availability of $ 3,000 from Max as the base level and the change of 10%.

Problem b) Will Max be able to afford the additional loan payment?

Problem c) Should Max assume the payment of the additional loan?

Reference no: EM132950623

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