advice from most financial advisers states to spend no more than 28% of ones gross monthly income for ones…

advice from most financial advisers states to spend no more than 28% of ones gross monthly income for ones mortgage payment, and to spend no more than 36% of ones gross monthly income for ones total monthly debt. suppose a family has a gross annual income of $38,400. a. what is the maximum amount the family should spend each month on a mortgage payment? b. what is the maximum amount the family should spend each month for total credit obligations? c. if the familys monthly mortgage payment is 70% of the maximum they can afford, what is the maximum amount they should spend each month for all other debt? a. the maximum monthly mortgage payment should be $ . b. the maximum monthly total credit obligations should be $ . c. the maximum amount they should spend monthly on all other debt is $ .

advice from most financial advisers states to spend no more than 28% of ones gross monthly income for ones mortgage payment, and to spend no more than 36% of ones gross monthly income for ones total monthly debt. suppose a family has a gross annual income of $38,400. a. what is the maximum amount the family should spend each month on a mortgage payment? b. what is the maximum amount the family should spend each month for total credit obligations? c. if the familys monthly mortgage payment is 70% of the maximum they can afford, what is the maximum amount they should spend each month for all other debt? a. the maximum monthly mortgage payment should be $ . b. the maximum monthly total credit obligations should be $ . c. the maximum amount they should spend monthly on all other debt is $ .

Answer

Explanation:

Step1: Calculate monthly income

Annual income is $38400$, so monthly income $=\frac{38400}{12}=3200$.

Step2: Calculate maximum mortgage payment

Maximum mortgage payment is 28% of monthly income, so $0.28\times3200 = 896$.

Step3: Calculate maximum total credit obligations

Maximum total credit - obligations is 36% of monthly income, so $0.36\times3200=1152$.

Step4: Calculate actual mortgage payment

The family's monthly mortgage payment is 70% of the maximum they can afford. The maximum mortgage - payment is $896$, so actual mortgage payment $=0.7\times896 = 627.2$.

Step5: Calculate maximum for other debt

Maximum for other debt = Maximum total credit obligations - Actual mortgage payment. So $1152 - 627.2=524.8$.

Answer:

a. 896 b. 1152 c. 524.8