The correct amount of loan that shall be required by Cindy to restore her collectible car will be $13483.15. So, the correct option that matches with the statement is D.
Such amount required by Cindy can be calculated with two simple calculations that will help determine what is the actual cost of her restoration of collectible car.
- Collateral is considered to be the value of security in asset class which are liquid in nature to be presented in the custody of the creditor for securing any loans or financial help.
- The collateral to be presented to the bank can be calculated with the formula as below,
- [tex]\rm Collaterals\ To\ Be\ Secured=\ \dfrac {\rm Cost\ Of \ Restoration}{\rm Percentage\ Of\ Collateral\ Dmenaded\ By\ The\ Bank}[/tex]
- Now we have been the information that the total cost of restoration is $12000 and the bank has offered 89% of her collateral value to secure such amount of loan.
- Putting the given values in the formula below as,
- [tex]\rm Collateral\ To\ Be\ Secured= \dfrac {\$12000}{0.89}\\\\\\\rm Collateral\ To\ Be\ Secured= \$13483.15[/tex]
- So, it is clear that the Cindy will have to secure collateral equivalent to the value of $13483.15 for getting the amount of restoration of her collectible car in full.
Hence, the correct option is D that Cindy will have to keep $13483.14 with the bank to cover the cost of restoration of her car.
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