Question #1: Kim Lee is trying to decide whether she can afford a loan she needs...
Question #1:
Kim Lee is trying to decide whether she can afford a loan she needs in order to go to chiropractic school. Right now Kim is living at home and works in a shoe store, earning a gross income of $820 per month. Her employer deducts a total of $145 for taxes from her monthly pay. Kim also makes payments totaling $95 from several credit cards each month. The loan she needs for chiropractic school will cost an additional $120 per month.
What will be her new debt payments-to-income
ratio?
Homework Answers
Kim Lee, New debt payment to income ratio : is calculated by sum of all monthly debt payments dividend by gross income for the month.
= All monthly debt payments / Gross income
= (All credit card payments + new loan payment) / Gross income
Where,
Several credit card payments are $ 95
New loan payment is $ 125
Gross income is $ 820
= ($ 95 + $ 125) / $ 820
= $ 220 / $ 820
= 26.83%
New debt payment to income ratio would closed to 26.83%
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