What is Jason's debt to income ratio if his total monthly debt payments are $2080 and his monthly income is $6500?

What is Jason's debt to income ratio if his total monthly debt payments are $2080 and his monthly income is $6500?

• A. 10%
• B. 28%
• C. 32%
• D. 55%

Answer: (C)

To determine Jason's debt-to-income ratio, you divide his total monthly debt payments by his monthly income and then convert that figure into a percentage. In this case, Jason's monthly debt payments are $2080, and his monthly income is $6500. First, calculate the debt-to-income ratio as follows: 1. Divide the total monthly debt payments by the monthly income: \( \text{Debt-to-Income Ratio} = \frac{\text{Total Monthly Debt Payments}}{\text{Monthly Income}} \) \( \text{Debt-to-Income Ratio} = \frac{2080}{6500} \) 2. When you perform that division, you get approximately 0.32. 3. To convert this ratio into a percentage, multiply by 100: \( 0.32 \times 100 = 32\% \) Thus, Jason's debt-to-income ratio is 32%. This figure is crucial in lending scenarios since it helps lenders assess an individual's ability to manage monthly payments and repay debts. A debt-to-income ratio of 32% indicates a balance between income and obligations that is generally considered manageable for most lenders.

To determine Jason's debt-to-income ratio, you divide his total monthly debt payments by his monthly income and then convert that figure into a percentage. In this case, Jason's monthly debt payments are $2080, and his monthly income is $6500.

First, calculate the debt-to-income ratio as follows:

1. Divide the total monthly debt payments by the monthly income:

( \text{Debt-to-Income Ratio} = \frac{\text{Total Monthly Debt Payments}}{\text{Monthly Income}} )

( \text{Debt-to-Income Ratio} = \frac{2080}{6500} )

2. When you perform that division, you get approximately 0.32.

3. To convert this ratio into a percentage, multiply by 100:

( 0.32 \times 100 = 32% )

Thus, Jason's debt-to-income ratio is 32%. This figure is crucial in lending scenarios since it helps lenders assess an individual's ability to manage monthly payments and repay debts. A debt-to-income ratio of 32% indicates a balance between income and obligations that is generally considered manageable for most lenders.