Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Chapter 6

Practice Problem #4

4. Calculating the Debt Payments-to-Income Ratio. Kim 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 $145 for taxes from her monthly pay. Kim also pays $95 on several credit card debts
each month. The loan she needs for chiropractic school will cost an additional $120 per month. Help Kim make her decision
by calculating her debt payments-to-income ratio with and without the college loan. (Remember the 20 percent rule.)
LO6-3
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Transcribed Image Text:4. Calculating the Debt Payments-to-Income Ratio. Kim 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 $145 for taxes from her monthly pay. Kim also pays $95 on several credit card debts each month. The loan she needs for chiropractic school will cost an additional $120 per month. Help Kim make her decision by calculating her debt payments-to-income ratio with and without the college loan. (Remember the 20 percent rule.) LO6-3
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