2. Determining the Debt PaymentstoIncome Ratio. Louise McIntyres monthly gross income is $2,000. Her employer withholds $400

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2. Determining the Debt Payments–to–Income Ratio. Louise McIntyre’s monthly gross income is $2,000. Her employer withholds

$400 in federal, state, and local income taxes and $160 in Social Security taxes per month. Louise contributes $80 per month for her IRA. Her monthly credit payments for Visa, MasterCard, and Discover cards are $35, $30, and $20, respectively. Her monthly payment on an automobile loan is $285. What is Louise’s debt payments–to–income ratio? Is Louise living within her means?

Explain. (Obj. 3)

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Personal Finance

ISBN: 9780073530697

10th Edition

Authors: Jack Kapoor, Les Dlabay, Robert Hughes

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