Question

Jim has an annual salary of $96,000. His monthly expenses include a $2,500 mortgage payment, a $250 lease payment, $500 in minimum credit card payments, and a $425 payment on his speed boat. He also receives $1,200 in interest from his savings and other accounts each month. Calculate Jim’s DTI (debt-to-income) ratio.
a.
30%
b.
35%
c.
40%
d.
45%


Please select the best answer from the choices provided

A
B
C
D

Answer 1

C

Monthly debts = $2,500 + $250 + $500 + $425 = $3,675.
Monthly income = $96,000/12 + $1,200 = $8,000 + $1,200 = $9,200.
DTI = $3,675 / $9,200 ≈ 0.3995 ≈ 40%.