Question

Nicholas makes $2,000 per month. He spends $300 on credit card payments and $350 on an auto loan. What is his debt-to-income ratio? 17.5 percent 22 percent 2.7 percent 32.5 percent

Answer 1

$300+$350=$650

650/2,000=0.325

Move the decimal over to get 32.5%

This works with any percentage (get 65/80 on a test, divide 65 by 80 and get 0.8125 which makes 81.25%)

Answer 2

We have to find Debt-to-Income ratio. It is simply the ratio of total debt and total income.

From the given information, his income is $2000. Also, amount of debt is $300 ( credit card payments) and $350 (auto loan), so
`300+350=650`

Debt-to-Income ratio =
`(300+350)/(2000) =(650)/(2000)=0.325`

To get percentage, we multiply it by 100 to get:

`0.325*100=32.5` %

ANSWER: 32.5 percent