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Determine Trudy's DTI (debt-to-income) ratio. Trudy's job pays her \[tex]$36,000 annually.

\begin{tabular}{|l|l|}
\hline
\multicolumn{2}{|l|}{Trudy's Debt and Income} \\
\hline
Income: & \$[/tex]36,000 (annually) \\
\hline
Rent: & \[tex]$695 (monthly) \\
\hline
Car Payment: & \$[/tex]265 (monthly) \\
\hline
Student Loan: & \[tex]$200 (monthly) \\
\hline
Credit Cards: & \$[/tex]160 (monthly) \\
\hline
\end{tabular}

a. [tex]$28\%$[/tex]
b. [tex]$35\%$[/tex]
c. [tex]$37\%$[/tex]
d. [tex]$44\%$[/tex]

Please select the best answer from the choices provided.



Answer :

GinnyAnswer
To determine Trudy's Debt-to-Income (DTI) ratio, we need to follow these steps:

1. Calculate Total Monthly Expenses:
Trudy's monthly expenses consist of the following:
- Rent: \[tex]$695 - Car Payment: \$[/tex]265
- Student Loan: \[tex]$200 - Credit Cards: \$[/tex]160

To find the total monthly expenses, we add these amounts together:
[tex]\[ \text{Total Monthly Expenses} = 695 + 265 + 200 + 160 = \$1320 \][/tex]

2. Calculate Total Annual Expenses:
Since we have the total monthly expenses (\[tex]$1320), we need to find out the total annual expenses by multiplying the monthly expenses by 12 (the number of months in a year): \[ \text{Total Annual Expenses} = 1320 \times 12 = \$[/tex]15840
\]

3. Calculate the Debt-to-Income (DTI) Ratio:
The DTI ratio is calculated by dividing the total annual expenses by the annual income, and then multiplying by 100 to convert it to a percentage:
[tex]\[ \text{DTI Ratio} = \left(\frac{\text{Total Annual Expenses}}{\text{Annual Income}}\right) \times 100 \][/tex]
Plugging in the values, we get:
[tex]\[ \text{DTI Ratio} = \left(\frac{15840}{36000}\right) \times 100 = 44.0\% \][/tex]

4. Select the Best Answer:
The available options for DTI ratio are:
- a. 28%
- b. 35%
- c. 37%
- d. 44%

The calculation shows that Trudy's DTI ratio is 44.0%. Therefore, the best answer from the choices provided is:

[tex]\[ \boxed{d. \ 44\%} \][/tex]

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