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(Solution document) I tried solving this problem which looks simple, but I'm not getting any of the answers below: Jill's weekly mortgage payment is $400 (principal and...


I tried solving this problem which looks simple, but I'm not getting any of the answers below:


Jill's weekly mortgage payment is $400 (principal and interest). Monthly heating and condo costs are $80 and $220, respectively. Property taxes are $3,200 per annum. Consumer debt payments are $500 a month. If Jill earns $80,000 gross a year, what is her GDS ratio?

                      

a)   12.85%

b)   32.85%

c)    36.91%

d)   40.35%


The formula for GDS that we are taught is: GDS=(Principal+Interest+Tax+Heat)/ Gross Annual Income


First I'm converting everything to months

3200/12=266.67$

80000/12=6666.67$

Then I'm doing:

I'm doing (400$+266.67$+80$)/6666.67$=11.20% which is not one of the options.

I need help figuring out what I'm doing wrong.

Thanks

 







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