Recommended standards for the debt to income ratio

Assignment Help Financial Management
Reference no: EM131308208

Roberto and Jessica Suarez have a gross income of $53,000 a year and annual expenses of $51,500 including taxes. Their annual debt payments total $15,000. According to the recommended standards for the debt -to-income ratio, the Saurez's ratio of?

a. ?36 percent and is too high for easily manageable debt repayment.

b. ?36 percent implies they have the ability to easily make their debt repayments.

c. ?28 percent is much too high for easily manageable debt repayment.

d. ?28 percent implies they have the ability to make their debt repayments.

Reference no: EM131308208


Write a Review


Financial Management Questions & Answers

  Target capital structure without issuing additional shares

WACC Estimation On January 1, the total market value of the Tysseland Company was $60 million. During the year, the company plans to raise and invest $15 million in new projects. Assuming there is sufficient cash flow such that Tysseland can maintain..

  Whats the firms quick ratio

A firm has $900 millions of current assets, including $300 millions of inventory. It has $500 millions of current liabilities. What's the firm's quick ratio?

  Calculate the weighted average cost of capital

A firm wishes to explore the effect on its cost of capital of the rate at which the company pays taxes. the firms wishes to maintain a capital structure of 25% debt, 15% preferred stock, and 60% common stock. The cost of financing with retained earni..

  Calculate the convertible issues conversion ratio

An investment company recently issued convertible bonds with a $1,000 par value. The bonds have a conversion price of $25 a share. At the time of issue, the company's underlying stock price is $20. Calculate the convertible issue's conversion ratio?

  Account boasts a nominal annual return

Suppose your uncle takes the $40,000 now and wishes to invest it. He calls you because he is confused from an ad he sees. Investments-R-Us is offering the Euler Fund which compounds continuously and the Daley Fund which compounds 360 days per year. “..

  The rule of choosing the final proposal is simple

The rule of choosing the final proposal is simple. First, Z is the person to determine who (either X or Y) is the proposal raiser.

  Compute ms queens agi

Ms. Queen, age 21, is a full-time college student with an athletic scholarship that provides the following annual benefits: Tuition payment ...$12,800 Fees and books ...3,500 Room and board ...10,000 Ms. Queen works in the athletic department as a tr..

  Approximate cost of giving up cash discount from supplier

Prairie Manufacturing has four possible suppliers, all of which offer different credit terms. Except for the differences in credit terms, their products and services are virtually identical. Calculate the approximate cost of giving up the cash discou..

  How are capital and working capital different

How are capital and working capital different? - How are capital and working capital different?- What is leverage, and how does it work? What is the main concern about using it?

  Calculate dollar weighted return using financial calculator

A pension fund that begins with $500,000 earns 15% the first year and 10% the second year. At the beginning of the second year, the sponsor contributes another $300,000. Calculate the IRR (dollar weighted return) using a financial calculator and show..

  What is the discounted payback period of each of projects

Your division is considering two investment projects, each of which requires an up-form expenditure of $25 million. You estimate that the cost of Capital is 10% and that the investments will produce the following after-tax cash flows (in millions of ..

  What is the effective annual rate on this loan

You want to buy a new sports coupe for $83,500, and the finance office at the dealership has quoted you a 6.5 percent APR loan for 60 months to buy the car. What will your monthly payments be? What is the effective annual rate on this loan?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd