Final answer:
The question seems to ask for Johnny's debt to income ratio, which requires specific financial information not provided. However, the provided information is used to calculate the percentage change in income, which indicates a 41.27% increase in income. Therefore, without the necessary details on Johnny's monthly debts and income, we cannot determine the debt to income ratio.
Thus, the correct option is D.
Step-by-step explanation:
The student's question seems to be asking which option (A, B, C, or D) represents Johnny's debt to income ratio. However, the information provided calculates the percentage change in income, which is a different concept. Let's address the provided calculation first.
The formula for percentage change in income is as follows:
Percentage change in income = [(change in income) / (original income)] × 100
Using the numbers given:
Change in income = $38,000 - $25,000 = $13,000
Original income (average of the old and new income) = ($38,000 + $25,000) / 2 = $31,500
Using the formula:
Percentage change in income = ($13,000 / $31,500) × 100 = 41.27%
This calculation, however, does not provide Johnny's debt to income ratio. To calculate a debt to income ratio, one would need the amount of Johnny's monthly debt payments and his monthly income. Without those specifics, we cannot determine Johnny's debt to income ratio.
Understanding the Concepts
Debt to income ratio is a financial measure typically used to evaluate an individual's ability to manage monthly payment and repay debts. It is calculated by dividing the total monthly debt payments by the monthly gross income, then multiplying by 100 to get a percentage.
On the other hand, a percentage change in income measures how much someone's income has increased or decreased over time, usually as a percentage.
Therefore, the correct option is D..35%