Question

Using the 28/36 ratio, determine the maximum allowable recurring debt for someone with an annual income of $86,250.
a.
$575.00
b.
$2,012.50
c.
$2,415.00
d.
$2,587.50



Please select the best answer from the choices provided


A
B
C
D

Answer 1

D

Monthly income = $86,250 / 12 = $7,187.50
Maximum recurring debt = 36% × $7,187.50 = $2,587.50