Final answer:
Caroline can afford a maximum of $1,186.20 per month for rent by applying the 30% rule to her gross annual salary of $47,448 and dividing the result by 12.
Step-by-step explanation:
To determine the maximum amount of rent Caroline can afford on a gross annual salary of $47,448, financial experts commonly recommend the 30% rule—which suggests spending no more than 30% of gross income on housing. To calculate this, multiply Caroline's gross annual salary by 30%:
Gross Annual Salary x 30% = Maximum Annual Rent
$47,448 x 0.30 = $14,234.40
To find the monthly rent, divide this number by 12:
Maximum Annual Rent ÷ 12 = Maximum Monthly Rent
$14,234.40 ÷ 12 = $1,186.20
Therefore, Caroline can afford to pay a maximum of $1,186.20 per month for rent.