Answer:
39.95%.
Step-by-step explanation:
We have been given that Jim has an annual salary of $96,000.
[tex]\text{Debt to income ratio}=\frac{\text{Total annual expenses}}{\text{ Total annual income}}\times 100[/tex]
First of all we will find Jim's total monthly expenses by adding all his monthly expenses.
[tex]\text{Jim's total monthly expenses}=\$2500+\$250+\$500+\$425[/tex]
[tex]\text{Jim's total monthly expenses}=\$3675[/tex]
Now let us find Jim's annual expenses by multiplying his monthly expenses by 12.
[tex]\text{Jim's total annual expenses}=\$3675\times 12[/tex]
[tex]\text{Jim's total annual expenses}=\$44,100[/tex]
As Jim receives $1,200 in interest from his savings and other accounts each month, so amount received in interest per year will be 12 times 1200.
[tex]\text{Amount received from interest per year}=12\times \$1200[/tex]
[tex]\text{Amount received from interest per year}=\$14400[/tex]
[tex]\text{Jim's total annual income}=\$14,400+\$96,000[/tex]
[tex]\text{Jim's total annual income}=\$110,400[/tex]
Upon substituting Jim's total annual expenses and income in debt to income ratio we will get,
[tex]\text{Jim's DTI}=\frac{\$44,100}{\$110,400}\times 100[/tex]
[tex]\text{Jim's DTI}=0.399456521739\times 100[/tex]
[tex]\text{Jim's DTI}=39.9456521739\%\approx 39.95%[/tex]
Therefore, Jim's debt-to-income ratio is 39.95%.
