ralph is thinking of switching jobs. he want to make sure that his new salary maintains a debt-to-income (dti) ratio of at most 36%. his dti ratio is currently 29% with a gross monthly income of $3,700. what minimum gross monthly income will ralph need to maintain a dti ratio of 36%?
a. $1,073.00
b. $1,332.00
c. $2,980.56
d. $3,862.80

Question

Accepted Answer

{ "quality": "clear", "question_count": 1, "skills_matched": [ "step_cot", "multiple_choice_formatter", "explain_then_answer", "tutor", "mastery_adaptive_brevity" ], "needs_drawing": false, "concepts_used": [ "Debt-to-Income Ratio", "Monthly Gross Income" ], "new_concepts": [], "current_concepts": [ "Debt-to-Income Ratio", "Monthly Gross Income" ] } ## Calculate current monthly debt payments Using the *Debt-to-Income Ratio* and *Monthly Gross Income* knowledge points $$ \begin{aligned} \text{Current Monthly Debt} &= \text{Current Gross Income} \times \text{Current DTI Ratio} \ &= \$3,700 \times 0.29 \ &= \$1,073 \end{aligned} $$ ## Calculate minimum required gross monthly income Using the *Debt-to-Income Ratio* and *Monthly Gross Income* knowledge points $$ \begin{aligned} \text{New DTI Ratio} &= \frac{\text{Monthly Debt}}{\text{New Gross Income}} \le 0.36 \ \text{Minimum New Gross Income} &= \frac{\text{Monthly Debt}}{0.36} \ &= \frac{\$1,073}{0.36} \ &\approx \$2,980.56 \end{aligned} $$

a. $1,073.00

b. $1,332.00

c. $2,980.56

d. $3,862.80

{ "subject": "Business", "question_type": "Multiple Choice", "knowledge_point": [ "Business", "Finance", "Debt-to-Income Ratio" ] }

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Question

Explanation:

Calculate current monthly debt payments

Calculate minimum required gross monthly income

Answer: