5
QuizMultiple Choice

Personal Liabilities — Quiz

Question 5 • Advanced Financial Algebra

Carolina's gross monthly salary is $⁢6,000 She has $⁢1,200 in total monthly debt payments, including a mortgage and car loan. What is her 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
15%
B
20%
C
25%
D
30%

Explanation

Divide Carolina’s total monthly debt payments by her gross monthly income: $1,200 ÷ $6,000 = 0.20. Multiply by 100 to convert the decimal to a percent: 0.20 × 100 = 20%. Her debt-to-income ratio is 20%, choice B.

AI-written and checked against the verified answer.

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