August's gross monthly income is $4,600.If according to the rule of 36 he can afford a maximum PITI of $1,125,what must his monthly consumer credit debt be?
A)$531
B)$163
C)$417
D)$383

Question

Quizplus · Accepted Answer

The rule of 36 states that a person should not spend more than 36% of their gross monthly income on housing costs (PITI). Therefore, August can afford a maximum PITI of $4,600 x 0.36 = $1,656. Since his PITI is $1,125, he can afford to spend $1,656 - $1,125 = $531 on monthly consumer credit debt.

August's Gross Monthly Income Is $4,600