Question 2 Buying a Vacation Home. Barrie and Inga Adlington, of Birmingham, England, have just finished putting their three daughters through college. As empty-nesters, they are considering purchasing a vacation home in the United States on a lake because prices have dropped in recent years. The house might also serve as a retirement home once they retire in 6 years. The Adlingtons' net worth is $383,000 including their home worth about $265,000 on which they currently owe $43,000 for their first mortgage, with a $778 per month payment. Their outstanding debts in addition to their mortgage include $12,500 on one car loan ($256 monthly payment), $13,700 on a second car loan ($287 monthly payment), and a $25,000 second mortgage on their home taken out to help pay for their daughters' ($187 monthly payment) college expenses. Their gross income is $100,000. b) The Adlington's are considering buying a vacation home. Based on their debt-to-income ratio (previous question), they should: (hint: see page 87) buy the vacation home buy a condo instead avoid buying the vacation home until after their debts are paid down avoid buying the vacation home until they have zero debt
Question 2 Buying a Vacation Home. Barrie and Inga Adlington, of Birmingham, England, have just finished putting their three daughters through college. As empty-nesters, they are considering purchasing a vacation home in the United States on a lake because prices have dropped in recent years. The house might also serve as a retirement home once they retire in 6 years. The Adlingtons' net worth is $383,000 including their home worth about $265,000 on which they currently owe $43,000 for their first mortgage, with a $778 per month payment. Their outstanding debts in addition to their mortgage include $12,500 on one car loan ($256 monthly payment), $13,700 on a second car loan ($287 monthly payment), and a $25,000 second mortgage on their home taken out to help pay for their daughters' ($187 monthly payment) college expenses. Their gross income is $100,000. b) The Adlington's are considering buying a vacation home. Based on their debt-to-income ratio (previous question), they should: (hint: see page 87) buy the vacation home buy a condo instead avoid buying the vacation home until after their debts are paid down avoid buying the vacation home until they have zero debt
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Question 2
Buying a Vacation Home. Barrie and Inga Adlington, of Birmingham, England, have just finished putting
their three daughters through college. As empty-nesters, they are considering purchasing a vacation
home in the United States on a lake because prices have dropped in recent years. The house might also
serve as a retirement home once they retire in 6 years. The Adlingtons' net worth is $383,000 including
their home worth about $265,000 on which they currently owe $43,000 for their first mortgage, with a
$778 per month payment. Their outstanding debts in addition to their mortgage include $12,500 on
one car loan ($256 monthly payment), $13,700 on a second car loan ($287 monthly payment), and a
$25,000 second mortgage on their home taken out to help pay for their daughters' ($187 monthly
payment) college expenses. Their gross income is $100,000.
b) The Adlington's are considering buying a vacation home. Based on their debt-to-income ratio
(previous question), they should:
(hint: see page 87)
buy the vacation home
buy a condo instead
avoid buying the vacation home until after their debts are paid down
avoid buying the vacation home until they have zero debt
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