Question

Bryson makes an annual salary of $42,000 a year. Apply the rule of housing to determine his monthly housing budget.

A. $420
B. $600
C. $875
D. $1,025

Answer 1

Answer: C. $875

Explanation:

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Answer 2

C. $875

Explanation:

The rule of housing is the rule of thumb of not using more than 25% of your gross income. This means that the households supposed limited expenses on housing would be a maximum of 25% only.

So to find the monthly housing budget of Bryson, we simply take his annual salary and multiply it by 25% or 0.25 and then divide the product by 12.

Monthly Housing Budget = ($42,000 * 0.25)/12

Monthly Housing Budget = 10500/12

Monthly Housing Budget = $875