1. Taking Out a Motorcycle Loan. Martin Jones is single and recently graduated from law school. He earns $9000 per month, an awesome salary for someone only 26 years old. However, he has $1,400 withheld for federal income tax, $540 for state income taxes, $686 for Social Security taxes, and $230 for health insurance every month. He has outstanding student loans of almost

$80,000 on which he pays about $900 per month and a 0% auto loan payment of $300 on a new Pontiac G6 he purchased during law school. He is considering taking out a loan to buy a BMW motorcycle.

(a) What is Martin’s debt payments-to-disposable income ratio?

(b) Based on your answer to “a” how would you advise Martin about his plan?