question archive Ricardo's monthly take-home pay is $2,500
Ricardo's monthly take-home pay is $2,500
Subject:AccountingPrice: Bought3
Ricardo's monthly take-home pay is $2,500. His monthly payments include his house payment of $800, his student loan payment of $100, and his car payment of $400. Which of the following is a correct statement concerning his consumer debt safety ratio?
Options:
| 1. At 52% of his take-home pay, his consumer debt safety ratio is far in excess of the recommended maximum. He should immediately do what he can to reduce his debt load. |
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2. At 20% of his take-home pay, his consumer debt safety ratio equals the recommended maximum. He would not want to incur any more consumer debt without paying off some of his existing debt. |
| 3. At 16% of his take-home pay, his consumer debt safety ratio is less than the recommended maximum. He could consider taking on a little more consumer debt if he felt it was necessary. |
| 4. At 36% of his take-home pay, his consumer debt safety ratio exceeds the recommended maximum. He should immediately do what he can to reduce his debt load. |
