When you graduate from college, you apply for and are offered a job that pays $1,900 per month. You have a student loan debt of $14,000 with a 4% interest rate. Answer parts a) through e) below. a) What should your maximum rent be to keep your Front-End DTI Ratio no higher than 29%? $ 551 (Round to the nearest dollar as needed.) b) What should your maximum student loan payment be to maintain a 37% Back-End DTI Ratio? $ 152 (Round to the nearest dollar as needed.) c) Use technology to determine how long it will take to pay off the loan using the payment from part b). 110 month(s) (Round to the nearest whole number as needed.) d) You want to pay off the loan in a more reasonable amount of time, 72 months. Use technology to determine the amount that the loan payment needs to be to meet this goal. $ 219 (Round to the nearest dollar as needed.) e) If you increase the loan payment to the amount calculated in part d), what minimum income level do you need to maintain your present lifestyle and make sure that your Back-End DTI ratio is at 37%? Assume your rent is the amount calculated in part a). $2,081 (Round to the nearest dollar as needed.)
When you graduate from college, you apply for and are offered a job that pays $1,900 per month. You have a student loan debt of $14,000 with a 4% interest rate. Answer parts a) through e) below. a) What should your maximum rent be to keep your Front-End DTI Ratio no higher than 29%? $ 551 (Round to the nearest dollar as needed.) b) What should your maximum student loan payment be to maintain a 37% Back-End DTI Ratio? $ 152 (Round to the nearest dollar as needed.) c) Use technology to determine how long it will take to pay off the loan using the payment from part b). 110 month(s) (Round to the nearest whole number as needed.) d) You want to pay off the loan in a more reasonable amount of time, 72 months. Use technology to determine the amount that the loan payment needs to be to meet this goal. $ 219 (Round to the nearest dollar as needed.) e) If you increase the loan payment to the amount calculated in part d), what minimum income level do you need to maintain your present lifestyle and make sure that your Back-End DTI ratio is at 37%? Assume your rent is the amount calculated in part a). $2,081 (Round to the nearest dollar as needed.)
Chapter4: Time Value Of Money
Section: Chapter Questions
Problem 28P
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Transcribed Image Text:When you graduate from college, you apply for and are offered a job that pays $1,900 per month. You have a student loan debt of $14,000 with a 4% interest rate.
Answer parts a) through e) below.
a) What should your maximum rent be to keep your Front-End DTI Ratio no higher than 29%?
$ 551 (Round to the nearest dollar as needed.)
b) What should your maximum student loan payment be to maintain a 37% Back-End DTI Ratio?
$ 152 (Round to the nearest dollar as needed.)
c) Use technology to determine how long it will take to pay off the loan using the payment from part b).
110 month(s)
(Round to the nearest whole number as needed.)
d) You want to pay off the loan in a more reasonable amount of time, 72 months. Use technology to determine the amount that the loan payment needs to be to meet
this goal.
$ 219 (Round to the nearest dollar as needed.)
e) If you increase the loan payment to the amount calculated in part d), what minimum income level do you need to maintain your present lifestyle and make sure that
your Back-End DTI ratio is at 37%? Assume your rent is the amount calculated in part a).
$ 2,081 (Round to the nearest dollar as needed.)
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