Question

Jim has an annual salary of $96,000. His monthly expenses include a $2,500 mortgage payment, a $250 lease
payment, $500 in minimum credit card payments, and a $425 payment on his speed boat. He also receives $1,200 in
interest from his savings and other accounts each month. Calculate Jim's DTI (debt-to-income) ratio.
a. 30%
b. 35%
c. 40%
d. 45%we

Answer 1

Answer:

40%

Step-by-step explanation:

(c) in Edge2020

Answer 2

The Debt to Income Ratio of Jim is 40%

Data;

• Annual Income = $96,000 + (1200 * 12) = $96000 + 14400 = $110,400
• Mortgage payment = $2500 * 12 = $30,000
• Lease payment = $250
• Speed boat = $425
• Credit card = 500 * 12 = $6000

Debt To Income Ratio

This is calculated as the sum of his total expenditures or liabilities to his total asset and expressed as a percentage.

Total liabilities is calculated as

$30,000 + 5100+3000+ 6000 = 44100$

The DTI can be calculated as

$DTI = \frac{44100}{110400}*100\\DTI = 39.94 *100\\DTI = 40 \%$

From the calculations above, the DTI of Jim is 40%

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