Patty currently has $9,000 in monetary assets. Her total annual living expenses are $36,000 per year. She has a $12,000 balance on her car loan and she has $45,000 in equity in her house. What is her month's living expenses covered ratio?

Question

Quizplus · Accepted Answer

To calculate Patty's month's living expenses covered ratio, we need to divide her monetary assets by her total annual living expenses and convert it to a monthly ratio.

Monetary assets = $9,000 
Total annual living expenses = $36,000

Month's living expenses covered ratio = (Monetary assets / Total annual living expenses) / 12 
= ($9,000 / $36,000) / 12 
= 0.25 / 12 
= 0.0208

Therefore, Patty's month's living expenses covered ratio is 0.0208 times or 3.0 times approximately. That means she has enough monetary assets to cover her living expenses for 3 months.

So, the correct choice is C.

Patty Currently Has $9,000 in Monetary Assets