Using the 28/36 ratio, determine the maximum allowable recurring debt for someone with a monthly income of $4,850.
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Answered by
1
Answer:
Maximum allowable recurring debt is $ 388
Step-by-step explanation:
The 28/36 ratio states that :
A household should spend a maximum of 28% of monthly income on total housing expenses and not more than 36% on debt service.
Housing expense is calculated as :
28/100 × $ 4850 = $ 1358
The amount for debt service is calculated as :
36/100 × $ 4850 = $ 1746
From the calculations we can get the maximum allowable recurring debt.
The maximum allowable recurring debt is :
= $ 1746 - $ 1358 = $ 388
Answered by
1
Answer:
a.
$388
Step-by-step explanation:
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