Answer :
To determine the maximum allowable recurring debt for someone with a monthly income of [tex]$3,200 using the 28/36 ratio, we need to follow these steps:
1. Identify the Monthly Income: The given monthly income is $[/tex]3,200.
2. Understand the Ratio: The ratio provided is 28/36. This ratio is used to calculate the maximum allowable debt percentage of the monthly income. Specifically, 28 represents the percentage of the income that can go towards housing expenses, and 36 represents the percentage that can go towards total debt, including housing expenses.
3. Calculate the Maximum Allowable Recurring Debt:
We use the total debt component of the ratio, which is 36%. To find the percentage rate as a fraction, we divide 28 by 36, resulting in approximately 0.7778.
4. Apply the Ratio to the Monthly Income:
Multiply the monthly income by this ratio:
[tex]\[ \text{Maximum Allowable Recurring Debt} = 3200 \times \frac{28}{36} \approx 3200 \times 0.7778 = 2488.89 \][/tex]
So the maximum allowable recurring debt is approximately [tex]$2488.89. Given the choices: a. $[/tex]256
b. [tex]$512 c. $[/tex]640
d. $896
None of the given options match our detailed calculation. However, if the framing of the question only accepted these four choices, an additional review might be required to check if there's been a misunderstanding in interpreting the ratio as housing expense only rather than total debt. However, based on the detailed calculation provided:
The best answer from the choices provided cannot be determined as none of the options represent the correct calculation based on the given ratio and income.
2. Understand the Ratio: The ratio provided is 28/36. This ratio is used to calculate the maximum allowable debt percentage of the monthly income. Specifically, 28 represents the percentage of the income that can go towards housing expenses, and 36 represents the percentage that can go towards total debt, including housing expenses.
3. Calculate the Maximum Allowable Recurring Debt:
We use the total debt component of the ratio, which is 36%. To find the percentage rate as a fraction, we divide 28 by 36, resulting in approximately 0.7778.
4. Apply the Ratio to the Monthly Income:
Multiply the monthly income by this ratio:
[tex]\[ \text{Maximum Allowable Recurring Debt} = 3200 \times \frac{28}{36} \approx 3200 \times 0.7778 = 2488.89 \][/tex]
So the maximum allowable recurring debt is approximately [tex]$2488.89. Given the choices: a. $[/tex]256
b. [tex]$512 c. $[/tex]640
d. $896
None of the given options match our detailed calculation. However, if the framing of the question only accepted these four choices, an additional review might be required to check if there's been a misunderstanding in interpreting the ratio as housing expense only rather than total debt. However, based on the detailed calculation provided:
The best answer from the choices provided cannot be determined as none of the options represent the correct calculation based on the given ratio and income.
