Welcome to Westonci.ca, your go-to destination for finding answers to all your questions. Join our expert community today! Join our Q&A platform to connect with experts dedicated to providing accurate answers to your questions in various fields. Discover in-depth answers to your questions from a wide network of professionals on our user-friendly Q&A platform.
Sagot :
To help Kim decide whether she can afford the loan for chiropractic school, we need to calculate her debt payments-to-income ratio both with and without the college loan. This ratio will show us what percentage of her monthly net income is used to pay debts. According to the 20 percent rule, it is generally advised not to exceed 20% of your income on debt payments.
Let's proceed with the step-by-step calculations:
1. Calculate Kim's Net Income:
- Gross Income: [tex]$\$[/tex] 1,760[tex]$ - Tax Deductions: $[/tex]\[tex]$ 199$[/tex]
Net Income = Gross Income - Tax Deductions
Net Income = [tex]$1,760 - 199 = \$[/tex] 1,561[tex]$ 2. Calculate Debt Payments Without the College Loan: - Credit Card Debt Payments: $[/tex]\[tex]$ 189$[/tex]
Since there is no additional loan cost without the college loan,
Debt Payments Without Loan = Credit Card Debt Payments = [tex]$\$[/tex] 189[tex]$ 3. Calculate Debt Payments With the College Loan: - Credit Card Debt Payments: $[/tex]\[tex]$ 189$[/tex]
- College Loan Cost: [tex]$\$[/tex] 172[tex]$ Debt Payments With Loan = Credit Card Debt Payments + College Loan Cost Debt Payments With Loan = $[/tex]189 + 172 = \[tex]$ 361$[/tex]
4. Calculate Debt Payments-to-Income Ratio Without the College Loan:
- Debt Payments Without Loan: [tex]$\$[/tex] 189[tex]$ - Net Income: $[/tex]\[tex]$ 1,561$[/tex]
Ratio Without Loan = (Debt Payments Without Loan / Net Income) 100
Ratio Without Loan = ([tex]$189 / $[/tex]1,561) 100 ≈ 12.11%
5. Calculate Debt Payments-to-Income Ratio With the College Loan:
- Debt Payments With Loan: [tex]$\$[/tex] 361[tex]$ - Net Income: $[/tex]\[tex]$ 1,561$[/tex]
Ratio With Loan = (Debt Payments With Loan / Net Income) 100
Ratio With Loan = ([tex]$361 / $[/tex]1,561) 100 ≈ 23.13%
Therefore, the debt payments-to-income ratios are as follows:
- Ratio without college loan: 12.11%
- Ratio with college loan: 23.13%
Since the ratio with the college loan (23.13%) exceeds the advised 20% limit, Kim should carefully consider whether she can afford this additional financial burden.
Let's proceed with the step-by-step calculations:
1. Calculate Kim's Net Income:
- Gross Income: [tex]$\$[/tex] 1,760[tex]$ - Tax Deductions: $[/tex]\[tex]$ 199$[/tex]
Net Income = Gross Income - Tax Deductions
Net Income = [tex]$1,760 - 199 = \$[/tex] 1,561[tex]$ 2. Calculate Debt Payments Without the College Loan: - Credit Card Debt Payments: $[/tex]\[tex]$ 189$[/tex]
Since there is no additional loan cost without the college loan,
Debt Payments Without Loan = Credit Card Debt Payments = [tex]$\$[/tex] 189[tex]$ 3. Calculate Debt Payments With the College Loan: - Credit Card Debt Payments: $[/tex]\[tex]$ 189$[/tex]
- College Loan Cost: [tex]$\$[/tex] 172[tex]$ Debt Payments With Loan = Credit Card Debt Payments + College Loan Cost Debt Payments With Loan = $[/tex]189 + 172 = \[tex]$ 361$[/tex]
4. Calculate Debt Payments-to-Income Ratio Without the College Loan:
- Debt Payments Without Loan: [tex]$\$[/tex] 189[tex]$ - Net Income: $[/tex]\[tex]$ 1,561$[/tex]
Ratio Without Loan = (Debt Payments Without Loan / Net Income) 100
Ratio Without Loan = ([tex]$189 / $[/tex]1,561) 100 ≈ 12.11%
5. Calculate Debt Payments-to-Income Ratio With the College Loan:
- Debt Payments With Loan: [tex]$\$[/tex] 361[tex]$ - Net Income: $[/tex]\[tex]$ 1,561$[/tex]
Ratio With Loan = (Debt Payments With Loan / Net Income) 100
Ratio With Loan = ([tex]$361 / $[/tex]1,561) 100 ≈ 23.13%
Therefore, the debt payments-to-income ratios are as follows:
- Ratio without college loan: 12.11%
- Ratio with college loan: 23.13%
Since the ratio with the college loan (23.13%) exceeds the advised 20% limit, Kim should carefully consider whether she can afford this additional financial burden.
Your visit means a lot to us. Don't hesitate to return for more reliable answers to any questions you may have. Thank you for visiting. Our goal is to provide the most accurate answers for all your informational needs. Come back soon. Thank you for visiting Westonci.ca. Stay informed by coming back for more detailed answers.