Can pls someone explain me this ? Thank you
The Browns’ gross monthly income is $2900. They have 12
remaining payments of $410 on a new car. What maximum monthly
payment does the bank’s loan officer feel that the Browns can afford?
For Further Reading
Maths - drwls, Wednesday, March 19, 2008 at 1:37pm
You would need to know more about their other expenses to answer this question. Are you talking about a bank mortgage loan?
Maths - Mike, Wednesday, March 19, 2008 at 1:40pm
Its the car loan and no other expense is given this is the whole question..
I agree with DrWLS. The question is not answerable as stated.
Is it possible that it refers to some previous information?
Since they have aready been paying off a car loan at $410 per month for about three years, a bank officer considering a new car loan would probably assume they can afford to make similar or slightly higher payments on a new car, assuming they traded in the old one. But first, their credit rating and income sources should be checked.
Thats exactly why I am confused but this is what the question says and there is no additional information about this.. Maybe its a trick question
the answer is $410 only for 12 more months as they are already paying..
To determine the maximum monthly payment the bank loan officer feels the Browns can afford, we need to consider their gross monthly income and the remaining payments on the car loan.
The Browns' gross monthly income is $2900. This is the total amount they earn before any deductions or expenses.
They have 12 remaining payments of $410 on their new car loan. This means they have 12 more months to pay off the loan, and each payment is $410.
To find the maximum monthly payment they can afford, we need to consider their income and expenses. Typically, financial advisors recommend keeping around 30% of your monthly income for housing expenses (including loans).
In this case, if we assume the car loan payment is the only expense, we can calculate the maximum car loan payment by multiplying the income by 30% and dividing by the number of remaining payments.
Maximum car loan payment = (30% of gross monthly income) / (number of remaining payments)
Maximum car loan payment = (0.3 * $2900) / 12
Maximum car loan payment = $870 / 12
Maximum car loan payment = $72.50
Therefore, the maximum monthly car loan payment the bank loan officer feels the Browns can afford is $72.50.
Please note that this calculation is based on the assumption that the car loan payment is the only expense they have. It's important to consider all expenses and financial obligations when determining affordability.