Question

Owen makes $3,000 per month. He spends $300 on credit card payments and $350 on an auto loan. What is his debt-to-income ratio?

Answer 1

21% or 22.6% (I think!)

$300+$350 = 650

650/3000=0.2166666(repeating)

0.216x100=21.6%!

So that could also be rounded out to 22%, whichever option you have on your test (:

Answer 2

The debt-to-income ratio is 13:60

Explanation:

Owen makes $3,000 per month.

He spends $300 on credit card payments and $350 on an auto loan.

`\text{Dept-to-income ratio}=\frac{\text{Total Monthly debt}}{\text{Total monthly income}}`

Debt is amount whose amount paid by Owen.

Total monthly Debt = Credit Card Payment + Loan payment

= 300+350

= $650

Total monthly Income = $3000

Substitute into formula

`\text{Dept-to-income ratio}=(650)/(3000)=(13)/(60)`

In percentage 13:60 = 21.67% ≈ 22%

Hence, The debt-to-income ratio is 13:60