1. According to the affordability formulas given, Joe-Bob <u>cannot afford</u> to take out another loan.
2. Joe-Bob should follow the affordability formulas if he wants to live without financial stress caused by debts.
3. Joe-Bob may decide not to follow the affordability formula, if he can reduce his fixed monthly payments or increase his income.
4. Taking out the car loan will force Joe-Bob to increase his DTI and reduce his savings, investments, and discretionary spending.
<h3>What is affordability?</h3>
Affordability refers to a person's financial ability to afford some fixed expenses without impacting negatively the variable expenses.
Affordability can be measured as a Debt To Income (DTI) ratio.
<h3>Data and Calculations:</h3>
Current monthly income = $3,500
Monthly mortgage payment = $900
Monthly student loan payment = $350
Total monthly debt payment = $1,250
Debt To Income (DTI) = 35.7% ($1,250/$3,500 x 100)
Thus, with a DTI of 36%, Job Bob should not take out an additional car loan.
Learn more about Debt To Income (DTI) ratio at brainly.com/question/26258146
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