Eric Jones develops computer software for a major company.Eric's salary and bonuses total $82,000,but he pays $29,233 in income and Social Security taxes.If Eric's annual debt repayments are $33,620,what is his debt -to-income ratio?
A)41 percent
B)64 percent
C)36 percent
D)77 percent

Question

Quizplus · Accepted Answer

The debt-to-income ratio is calculated by dividing the annual debt repayments by the total income before taxes. Eric's total income before taxes is $82,000. His annual debt repayments are $33,620. Therefore, the debt-to-income ratio is $33,620 / $82,000 = 0.41, or 41 percent.

Eric Jones Develops Computer Software for a Major Company