Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

3. Debt safety ratio - How much credit can you stand? To maintain financial stability, people should know how much credit they can comfortably tolerate.

image text in transcribed
image text in transcribed
3. Debt safety ratio - How much credit can you stand? To maintain financial stability, people should know how much credit they can comfortably tolerate. The debt safety ratio is a computation that defines one's monthly loan repayment burden. It compares loan obligations to income. The formula for the debt safety ratio is: Debt Safety Ratio = Total Monthly Consumer Credit Payments / Monthly Take-Home Pay Debt Safety Ratio Darnell wants to determine his current debt safety ratio. His monthly take-home pay is $5,000. He compiled the following monthly loan payment information: The total monthly loan payments figure Damell will use when computing his debt safety ratio is $ mortgage. Darneli's debt safety ratio is % and considered Damell's debt safety ratio changed to 20%. His take-home pay must have or his monthly loan payments must have information: The total monthly loan payments figure Damell will use when computing his debt safety ratio is $ include his house mortgage. Darnell's debt safety ratio is % and considered Darnell's debt safety ratio changed to 20%. His take-home pay must have or his monthly loan payments must have . Lenders may now be willing to give him a loan than they were before this change. How can periodically computing one's debt safety ratio be useful? Check all that apply. It can serve as an early warning system of approaching financial trouble, providing time to take preventive measures. It can influence decisions whether to return to school, if a loan will be needed to pay for it. It can influence decisions about looking for a higher-or lower-paying job

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Beyond Audit Auditing Remotely And Delivering Value

Authors: Robert L. Mainardi

1st Edition

1119789605, 978-1119789604

More Books

Students also viewed these Accounting questions