Reference no: EM132966225

Jasmine and their spouse are considering purchasing a larger house for their growing family. Below is a summary of their current combined income and expenses.

Combined Salary (Gross Annually) $125,000

Monthly Mortgage Payment $2,600

Master Card (minimum monthly payment) $1,500

Utilities (Monthly - Heat and Electricity) $250

Car Loan Payment (Monthly) $550

Cable TV (Monthly) $75

Cell-Phone Plan (Monthly) $150

Line of Credit (minimum monthly payment) $350

Property Tax (annual) $3,900

Problem 1: What are their monthly debt payments?

Option 1: $2,700

Option 2: $2,900

Option 3: $2,400

Option 4: $3,040

Option 5: $2,800

Problem 2: What is their Total Debt Service (TDS) Ratio?

Option 1: 55.49%

Option 2: 60.77%

Option 3: 54.84%

Option 4: 59.17%

Option 5: 56.40%

Problem 3: Is this an acceptable TDS?

Option 1: No, it is above 40%

Option 2: It cannot be determined

Option 3: Yes, it is below 40%

Option 4: Yes, it is below 20%

Option 5: No, it is below 20%