EBK PFIN
6th Edition
ISBN: 8220103648844
Author: Billingsley
Publisher: CENGAGE L
expand_more
expand_more
format_list_bulleted
Question
Chapter 6, Problem 3FPE
Summary Introduction
To identify: The debt safety ratio of Person DW and the amount of monthly debt payment at given monthly take-home pay and 12.5% debt safety ratio. The monthly take-home pay of Person DW at given amount of monthly debt payment and 12.5% debt safety ratio
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Katherine Hunt is evaluating her debt safety ratio. Her monthly take-home pay is $3,160. Each month, she pays $350 for an auto loan, $90 on a personal line of credit, $80 on a department store charge card, and $105 on her bank credit card. Complete Worksheet 6.1 by listing Katherine's outstanding debts, and then calculate her debt safety ratio. Round the answer to 1 decimal place. Enter debt safety ratio as a percentage.
%
Given her current take-home pay, what is the maximum amount of monthly debt payments that Katherine can have if she wants her debt safety ratio to be 12.5 percent? Round the answer to the nearest dollar.
$
Given her current monthly debt payment load, what would Katherine's take-home pay have to be if she wanted a 12.5 percent debt safety ratio? Round the answer to the nearest dollar.
$
Alyssa Clark is evaluating her debt safety ratio. Her monthlytake- home pay is $3,320. Each month, she pays $380 for an auto loan, $120 on a personal line of credit, $60 on a department store charge card, and $85 on her bank credit card. Complete Worksheet 6.1 by listing Alyssa’s outstanding debts, and then calculate her debt safety ratio. Given her current take-home pay, what is the maximum amount of monthly debt payments that Alyssa can have if she wants her debt safety ratio to be 12.5 percent? Given her current monthly debt payment load, what would Alyssa’s take-home pay have to be if she wanted a 12.5 percent debt safety ratio?
Chloe Young is evaluating her debt safety ratio. Her monthly take-home pay is $3,320. Each month, she pays $380 for an auto loan, $120 ona personal line of credit, $60 on a department store charge card, and $85 on her bank credit card. Complete Worksheet 6.1 by listing Chloe’s outstanding debts, and then calculate her debt safety ratio. Given her current take-home pay, what is the maximum amount of monthly debtpayments that Chloe can have if she wants her debt safety ratio to be 12.5 percent? Given her current monthly debt payment load, what would Chloe’s take-home pay have to be if she wanted a 12.5 percent debt safety ratio?
Knowledge Booster
Similar questions
- 4 Diana Wade is evaluating her debt safety ratio. Her monthly take-home pay is $3,320. Each month, she pays $380 for an auto loan, $120 on a personal line of credit, $60 on a department store charge card, and $85 on her bank credit card. Complete Worksheet 6.1 by listing Diana’s outstanding debts, and then calculate her debt safety ratio. Given her current take-home pay, what is the maximum amount of monthly debt payments that Diana can have if she wants her debt safety ratio to be 12.5 percent? Given her current monthly debt payment load, what would Diana’s take-home pay have to be if she wanted a 12.5 percent debt safety ratio?arrow_forwardJamie Lee wants to determine if she can afford the monthly payments for all of her purchases before she completes the applica process. Use the information below to determine her debt payment-to-income ratio. Current Financial Situation Assets: Income: Checking account $1,900 Savings account $7,400 Gross monthly salary Net income $2,850 $2,195 Emergency fund savings account $2,900 Monthly Expenses: IRA balance $430 Rent obligation $370 Car $3,000 Utilities/Electric $80 Liabilities: Utilities/Water $50 Student loan $11,000 Utilities/Cable $75 (Jamie is still a full-time student, so Food $135 no payments are required on the loan Gas/Maintenance $140 until after graduation) Credit card payment $0 Acme Home Goods (Washer/dryer $1,650 Acme Home Goods $41 and refrigerator) Local Home Furnishings (Sofa $1,750 Local Home Furnishings $46 set) Big Box Store (52" LED HDTV) $1,150 Big Box Store $29 Automobile, Education, Personal, and Installment Loans Financial Institution or Account Number…arrow_forwardCalculating debt safety ratio using Worksheet 7.1. Prepare an inventory of Leo’s consumer debt. Find his debt safety ratio given that his take-home pay is $2,500 per month. Would you consider this ratio to be good or bad? Explain. Every six months, Leo Perez takes an inventory of the consumer debts that he has outstanding. His latest tally shows that he still owes $4,000 on a home improvement loan (monthly payments of $125); he is making $85 monthly payments on a personal loan with a remaining balance of $750; he has a $2,000, secured, single-payment loan that’s due late next year; he still owes $8,600 on a new car loan (monthly payments of $375); and he has a $960 balance on his MasterCard (minimum payment of $40), a $70 balance on his Shell credit card (balance due in 30 days), and a $1,200 balance on a personal line of credit ($60 monthly payments).arrow_forward
- Evaluate the Debt Safety Ratio using worksheet 6.1: By listing Chloe’s outstanding debts, and then calculate her debt safety Given her current take-home pay, what is the maximum amount of monthly debt payments that Chloe can have if she wants her debt safety ratio to be 12.5 percent? Given her current monthly debt payment load, what would Chloe’s take-home pay have to be if she wanted a 12.5 percent debt safety ratio? Chloe Young is evaluating her debt safety ratio. Her monthly take- home pay is $3,320. Each month, she pays $380 for an auto loan, $120 on a personal line of credit, $60 on a department store charge card, and $85 on her bank credit card.arrow_forwardEvaluating debt burden. Ted Phillips has a monthly take-home pay of $1,685; he makes payments of $410 a month on his outstanding consumer credit (excluding the mortgage on his home). How would you characterize Isaac’s debt burden? What if his take-home pay were $850 a month and he had monthly credit payments of $150?arrow_forwardSally is ready to purchase her first home. The bank has advised her that they need to work on some ratios before letting her know if the mortgage is approved. What is Sally's Gross Debt Service (GDS) ratio based on the information she has provided? Annual gross salary: $85,000 Estimated monthly mortgage payment: $1,650 Estimated annual property taxes: $1,500 Estimated monthly heating: $150 Estimated annual condo fees $500 Monthly student loan $70 Monthly car loan $120 Monthly loan to parents $50 Monthly home renovation loan payments $150 Monthly furniture loan $25 A 24% 34% C 27% D 32% E 16%arrow_forward
- Sally is ready to purchase her first home. The bank has advised her that they need to work on some ratios before letting her know if the mortgage is approved. What is Sally's Gross Debt Service (GDS) ratio based on the information she has provided? Annual gross salary: $85,000 Estimated monthly mortgage payment: $1,650 Estimated annual property taxes: $1,500 Estimated monthly heating: $150 Estimated annual condo fees $500 Monthly student loan $70 Monthly car loan $120 Monthly loan to parents $50 Monthly home renovation loan payments $150 Monthly furniture loan $25 A 24% 34% 27% 32% E 16%arrow_forwardLizzie Gunderson is trying to establish a credit history and applied for a Visa credit card. She paid the previous month's statement balance in full. The card carries a finance charge rate of 16%. What is the amount of finance charge if Lizzie pays off the current $168.20 monthly statement balance in full?arrow_forwardProblem: You are a mortgage broker at your local bank. Your cousin submitted an application for a mortgage with a monthly PITI of $1,319. His financial other obligations total $744.50. Your cousin earns a gross income of $5,005. (a) What is your cousin's expense ratio? (b) What is his total obligations ratio? (c) According to the Lending Ratio Guidelines in your textbook (Chapter 14, section II), for type of mortgage would Bool qualify, if any? Explain. (d) If your cousin decided to get a part-time job so he can qualify for conventional mortgage, how much additional monthly income would he need? (Set up an equation and solve it.)arrow_forward
- A borrower has two alternatives for a loan: (1) issue a $360,000, 75-day, 6% note or (2) issue a $360,000, 75-day note that the creditor discounts at 6%. Assume a 360-day year. This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below. Calculate the amount of the interest expense for each option. Round your answer to the nearest dollar. $ ________________________ Determine the proceeds received by the borrower in each alternative. Round your answers to the nearest dollar. (1) $360,000, 75-day, 6% interest-bearing note: $___________________________ (2) $360,000, 75-day note discounted at 6%: $ _________________________arrow_forwardAnnie's mortgage statement shows a total payment of $603.66 with $532.99 paid toward principal and interest and $70.67 paid for taxes and insurance. Taxes and insurance for three months were collected at closing. Now, after six months of payments, she is curious about the total in her escrow account. Calculate the amount for her, and explain the account. Question content area bottom Part 1 Calculate the amount for her and explain the account. (Select the best answer below.) A. Assuming no monthly, quarterly or semi-annual tax or insurance withdrawals from the account, the account should total $636.03. An escrow account is a special reserve account used to accumulate the annual property (real estate) tax payments and homeowner's insurance premiums for the homeowner. B. Assuming no monthly, quarterly or semi-annual tax or insurance withdrawals from the account, the account should total $212.01. An escrow account is a special reserve account used to accumulate the…arrow_forwardCompute the debt to credit ratio for a young man name John. He currently has a $15,000 car loan, $100,000 house loan and $3,000 in credit card debt. His total avaiable credit is $ 154815. Write your answer as a decimal that is accurate to two decimal places.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- PFIN (with PFIN Online, 1 term (6 months) Printed...FinanceISBN:9781337117005Author:Randall Billingsley, Lawrence J. Gitman, Michael D. JoehnkPublisher:Cengage Learning
PFIN (with PFIN Online, 1 term (6 months) Printed...
Finance
ISBN:9781337117005
Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher:Cengage Learning