PFIN (with PFIN Online, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)
6th Edition
ISBN: 9781337117005
Author: Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher: Cengage Learning
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Chapter 6, Problem 2FPE
Summary Introduction
To identify: The nature of debt burden of Person CB
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Evaluating 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?
Ted Phillips has 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 Ted’s debt burden? What if his take-home pay were $850 a month and he had monthly credit payments of$150?
Ted Phillips has monthly take-home pay of $1,200; he makes payments of $450 a month on his outstanding consumer credit (excluding the mortgage on his home). How would you characterize Ted's debt burden?
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PFIN (with PFIN Online, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)
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- 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_forwardKevin Mills has a monthly take-home pay of $3,315; he makes payments of $430 a month on his outstanding consumer credit (excluding the mortgage on his home). How would you characterize Kevin's debt burden? Assume that the debt safety ratio below 10% is considered low, below 15% - manageable, and the maximum acceptable debt safety ratio is 20%.arrow_forwardCorrect answer needed with step by step explanation.arrow_forward
- 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?arrow_forwardAndy's yearly income is $40,000. What would Andy's debt load be on a $15,000 personal loan? Would Andy's debt load follow the guidelines of the 20/10 rule? Provide a reason for Your answer.arrow_forwardBhupatbhaiarrow_forward
- Kaleb Makes a salary of $5,000 per month and has no other loans. What maximum amount of monthly home paymment ( mortgage, insurance, and property tax) can he realistically afford? 1. $750 2. $1,500 3. $2,500 4. $2,750 5. $4,250arrow_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_forwardChris and Karen have a combined take-home income of $5,000. Their total monthly payments on consumer debt are $875. What is their debt safety ratio? Are they exhibiting any sign of approaching credit problems?arrow_forward
- 7. Jordan wants a new phone. He makes $5400 a year at his part time job, and has a $72 monthly car payment. How much could he afford to pay, per month, on a new phone and maintain a safe debt to income ratio?arrow_forwardYou are a first-time homeowner and know you will only prequalify for an FHA loan. Your monthly gross income is $2,000. What is this minimum amount of recurring debt you are currently able to handle? (round to the nearest dollar) {DO NOT INCLUDE COMMAS AND $}arrow_forwardKatherine 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. $arrow_forward
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