Juanita is saving up to buy a truck. She wants to put $4000 down and borrow the rest. That down payment will lower the monthly payment so she can easily afford a new truck. She has been saving for 18 months and has half the money. It will take her about the same amount of time to save up the other half. What should she do with the $2000 in the meantime?
A. purchase a government bond and postpone the purchase
B. keep it her checking account with the money she spends regularly
C. change her strategy and borrow all of the money to get the truck sooner
D. invest in a treasury bill so that she can access the money when she needs it
A. purchase a government bond and postpone the purchase
By purchasing a government bond, Juanita can earn some interest on the $2000 while she continues to save up for the truck. This way, she is not simply letting the money sit in a checking account earning little to no interest. Additionally, postponing the truck purchase until she has saved all the money will allow her to stick to her original plan of putting $4000 down and borrowing the rest, which will ultimately result in a lower monthly payment for her.