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Sedbober [7]
2 years ago
10

Using the 28/36 ratio, determine the maximum allowable recurring debt for someone with a monthly income of $4,850. A. $388 b. $7

76 c. $970 d. $1,358 Please select the best answer from the choices provided A B C D.
Business
1 answer:
allsm [11]2 years ago
7 0

Recurring debt is the form of a due payment that occurs continuously as the amount of the money cannot be cancelled at the debtor's request it consists of the loan payment, alimony and child support.

$388 is the maximum allowable recurring debt.

<h3>What is the 28:36 ratio and how it is calculated?</h3>

The ratio states that a family should expend the utmost of 28% of its monthly earnings on entire housing expenditures but not additionally than 36% on complete debt service.

Given,

Monthly income = $4,850

  • <u>Maximum expense on housing expense</u> = 28% of 4850

\dfrac{28 \% \times \$4850}{100\%} = \$1358

  • <u>Maximum expense on total debt service</u> = 36% of 4850

\dfrac{36 \% \times \$4850}{100\%} = \$1746

  • Therefore, the maximum allowable recurring debt with a monthly income of $4,850

\$1746 - \$1358 = \$388

Thus, option A. $388 is correct.

Learn more about the 28:36 ratio here:

brainly.com/question/18250434

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