2. Determining the Debt Payments-to-Income Ratio. Louise's monthly gross income is $2,000. Her employer withholds $400 in federal, state, and local income taxes and $160 in Social Security taxes per month. Louise contributes $80 per month for her IRA. Her monthly credit payments for Visa, MasterCard, and Discover cards are $35, $30, and $20, respectively. Her monthly payment on an automobile loan is $285. What is Louise's debt payments-to-income ratio? Is Louise living within her means? Explain. LO6-3
2. Determining the Debt Payments-to-Income Ratio. Louise's monthly gross income is $2,000. Her employer withholds $400 in federal, state, and local income taxes and $160 in Social Security taxes per month. Louise contributes $80 per month for her IRA. Her monthly credit payments for Visa, MasterCard, and Discover cards are $35, $30, and $20, respectively. Her monthly payment on an automobile loan is $285. What is Louise's debt payments-to-income ratio? Is Louise living within her means? Explain. LO6-3
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Chapter 6
Practice Problem #2
Transcribed Image Text:2. Determining the Debt Payments-to-Income Ratio. Louise's monthly gross income is $2,000. Her employer withholds $400
in federal, state, and local income taxes and $160 in Social Security taxes per month. Louise contributes $80 per month for
her IRA. Her monthly credit payments for Visa, MasterCard, and Discover cards are $35, $30, and $20, respectively. Her
monthly payment on an automobile loan is $285. What is Louise's debt payments-to-income ratio? Is Louise living within
her means? Explain.
LO6-3
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