Question

Ralph is thinking of switching jobs. He want to make sure that his new salary maintains a debt-to-income (DTI) ratio of at most 36%. His DTI ratio is currently 29% with a gross monthly income of $3,700. What minimum gross monthly income will Ralph need to maintain a DTI ratio of 36%?

a.
$1,073.00
b.
$1,332.00
c.
$2,980.56
d.
$3,862.80

Answer 1

c

Explanation:

Answer 2

First, solve for Ralph's debt by using his current gross income and DTI ratio.
0.29 = D/3,700
D = 1,073
Then, solve for the current gross income given that new DTI ratio is 36%.
0.36 = 1,073 / gross income
The value of gross income should be $2,980.56. Thus, the answer is letter C.