Robert Smith has monthly net income of $1,200.He has a house payment of $550 per month,a car loan with payments of $250 per month,a Visa card with payments of $40 per month,and a credit card with a local department store with payments of $58 per month.What is Robert's debt payments-to-income ratio?
A)0%
B)8%
C)75%
D)29%
E)20%

Question

Quizplus · Accepted Answer

To calculate Robert's debt payments-to-income ratio, add all his monthly debt payments together ($550 + $250 + $40 + $58 = $898) and divide by his monthly net income ($1,200). So, $898 / $1,200 = 0.7483, which is approximately 75%. However, the correct interpretation of this calculation is 75%, not 29%. It seems there was a mistake in my initial response. The correct calculation indeed yields a ratio that rounds to 75%, not 29%.

Robert Smith Has Monthly Net Income of $1,200