posted by Janey
THe dumonts take- home pay ( after deductions for taxes and benefits ) is approximately $6045 monthly. currently nonmortgage debt payments equal $911 (i.e, $405 auto, $100 miscellaneous credit, $196 student loan, and $210 furniture). calculate and interpret their debt ratio. Assume they could purchase another auto with a $300 monthly payment. calculate and interpret their revised debt ratio. what advice would you give the dumonts about purchasing another vehicle?
a. RATIO = 911/6045 = 0.151 = 15.1%.
The max allowed is 43%. So 15% is very
b. RATIO = (911+300)/6045 = 0.200 = 20%.
The ratio is still good. Therefore, they could easily purchase another vehicle.