1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
astra-53 [7]
4 years ago
14

Madeline Rollins is trying to decide whether she can afford a loan she needs in order to go to chiropractic school. Right now Ma

deline is living at home and works in a shoe store, earning a gross income of $820 per month. Her employer deducts a total of $145 for taxes from her monthly pay. Madeline also pays $95 on several credit card debts each month. The loan she needs for chiropractic school will cost an additional $120 per month. Help Madeline make her decision by calculating her debt payments-to-income ratio with and without the college loan. (Remember the 20 percent rule.)
Business
1 answer:
Digiron [165]4 years ago
3 0

Answer:

Conclusion: <u>Madeline should not ask for the loan</u>

1. With college loan:

  • DTI  = 43.9%    

2. Without the college loan

  • DTI = 29.3%

Explanation:

Calculate the <em>DTI</em> for both scenaries, with and without the college loan.

  • <em>DTI</em> = (monthly debt payments) / (gross monthly income) × 100

                                            With college loan     W/O college loan

Monthly debt payments($)

  • Taxes                                    145                              145
  • Credit card                            90                                95
  • College loan                        120                                  0

                 Sub-total                    360                              240

Montly gross income ($)             820                              820

<u>1. With college loan:</u>

  • DTI  = (360/820)×100 = 43.9%    

<u>2. Without the college loan</u>

  • DTI = (240/820)×100 = 29.3%

There are several rules to assess if a DTI is good or not.

Some of those rules include that:

  • A DTI without mortage should be below 28%, thus 29.3% is slightly over the limit.

  • A DTI with mortage should be below 43%, thus 43.9% is slightly over the lilmit.

  • The 20% rule states that the debt without a mortage should be no more than 20 percent of the annual income after taxes.

Since the DTI is already higher than 20% the conclusion is that <u>Madeline should not ask for the loan.</u>

You might be interested in
M10-10 Computing and Reporting a Bond Liability at an Issuance Price of 102 [LO 10-3] E-Tech Initiatives Limited plans to issue
Mamont248 [21]

Answer:

Explanation:

Balance sheet presentation :

Long term liabilties  

Bonds payable                                                  500000

Add: Premium on bonds payable                     10000

Carrying value of bonds                                   510000

8 0
3 years ago
What is an example of a noncredible online source
denpristay [2]
“.org” and “.edu” are credible, where as “.com” is not very credible. A VERY non credible source is Wikipedia
8 0
4 years ago
Read 2 more answers
If the owner of a children's day-care center were to answer the question, "what business are you in?" with the statement, "We nu
S_A_V [24]

Answer:

Yes is a  market-oriented mission statement.

Explanation:

Small businesses solve problems and offer solutions for a customer's needs. A market-oriented mission statement defines a purpose that focuses on satisfying a customer's needs. The purpose of a market-oriented mission should match current market data and environments

5 0
3 years ago
Maddy works at Burgers R Us. Her boss tells her that if she stays with the company for five years, she will receive a bonus of $
Sergeu [11.5K]

Answer:

$4,038

Explanation:

Present value (PV) is the current value of a future sum of money or stream of cash flows given a specified rate of return. Future cash flows are discounted at the discount rate, and the higher the discount rate, the lower the present value of the future cash flows.

Present Value = Future Value  x (1/  ( 1 + interest rate ) ^ number of periods)

Present Value = 6,000 x (1/ ( 1 + 0.08) ^ 5)

Present Value  = 6,000 x 0.68058

Present Value = $4,038

4 0
3 years ago
Superior has provided the following information for its recent year of operation:
Anika [276]

Answer:

Option (a) is correct.

Explanation:

Given that,

Beginning balance of Retained Earnings = $75,000

Net income = $26,000

Ending retained earnings = $91,000

Total Balance during the year:

= Beginning balance of Retained Earnings + Net income

= $75,000 + $26,000

= $101,000

Dividend declared:

= Total Balance during the year - Ending retained earnings

= $101,000 - $91,000

= $10,000

Therefore, the amount of dividend declared by the Superior during its recent year of operation is $10,000.

3 0
3 years ago
Other questions:
  • Refer to the table above for a certain product's market in econland. if the world price of the product were $6 and an import quo
    15·1 answer
  • Suppose the required reserve ratio is 8% and the fed purchases $100 million worth of treasury bills from wells fargo. by how muc
    9·1 answer
  • The school of thought that monetary policy should be the main tool of stabilization policy, that is skeptical about the use of f
    9·1 answer
  • Importance of completing client records correctly
    6·1 answer
  • Rogers Sports sells volleyball kits that it purchases from a sports equipment distributor. The following static budget based on
    5·1 answer
  • What required all men age 21-30 to sign up for the draft?
    7·1 answer
  • Producer surplus is
    11·1 answer
  • HR creates the company’s first performance appraisal system. Managers are required to review employee productivity at least once
    13·1 answer
  • In March, Kelly Company had the following unit production costs: materials $12 and conversion costs $8. On March 1, it had no wo
    13·1 answer
  • Effects of business controls on the current and future operations of an enterprise
    7·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!