9
QuizMultiple Choice

Budget — Test

Question 9 • Financial Math

Arham has a gross monthly income of $⁢5,000 and spends $⁢500 on a car loan and $⁢250 on credit card debt. He also has a mortgage with monthly payments of $⁢1,250 What is his debt-to-income ratio, written as a percent? Use the debt-to-income ratio formula: (total monthly debt payments)/(gross monthly income)⋅100

Answer
A
40%
B
35%
C
25%
D
50%

Explanation

Add Arham’s monthly debt payments: $500 + $250 + $1,250 = $2,000. Divide that total by his gross monthly income and multiply by 100: ($2,000 ÷ $5,000) × 100 = 40%. His debt-to-income ratio is 40%, choice A.

AI-written and checked against the verified answer.

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