Answer: $75,000
Explanation:
The 28/36 rule is that the maximum that the person is to spend on household expenses is 28% of their monthly income. 36% of their monthly income is the maximum they can spend on debt and their household expenses.
This means that the maximum they are allowed to spend on debt is:
= 36 - 28
= 8%
If their maximum allowable debt is $500, this is 8% of their gross income. This Gross monthly income is therefore:
500 = x * 8%
= 500/ 8%
= $6,250
Their gross annual income is:
= 6,250 * 12
= $75,000